The yen surged, jumping to the strongest level in two months against the dollar, after government data showed Japanese investors were net sellers of overseas bonds and stocks for a fourth-straight week.
The greenback’s volatility against the Japanese currency jumped to the highest in more than two years before U.S. economic data that may provide more direction about when the Federal Reserve will begin to slow stimulus. The yen has now unwound all its losses since the Bank of Japan announced unprecedented monetary stimulus on April 4. New Zealand’s dollar dropped against all of its major peers after the central bank signaled the currency remains overvalued.
“The market wants evidence of Japanese capital outflow and that evidence is just not there, in fact it’s the opposite,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc. “Global fund managers who got into short yen trades in the early part of the year are now sitting very nervously watching the volatility in global markets.” A short is a bet an asset’s price will fall.
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