USD Lower Versus Yen Awaiting Action Packed Thursday

The dollar weakened to a more than six-week low against the yen on Tuesday, dipping below a key technical level as Treasury debt yields slipped on increased caution ahead of a trio of potentially market moving events on Thursday.

Nervous investors piled into low-risk bonds and other safe-haven assets on worries linked to Britain’s general election, the European Central Bank’s policy meeting and former FBI Director James Comey’s testimony before a Senate panel, all scheduled for Thursday.

“I think there’s a lot of anxiety ahead of Thursday’s events,” said Alfonso Esparza, senior currency analyst at OANDA in Toronto.

The dollar was down 0.92 percent against the yen at 109.43 yen, having broken below its 200-day moving average to touch 109.23 yen, its lowest since April 21.

“It’s safe-haven (demand) as well as the technical break that’s driving dollar-yen,” said Brad Bechtel, managing director FX at Jefferies in New York.

Comey, fired by President Donald Trump in May, will be grilled by the Senate Intelligence Committee on whether Trump tried to get him to back off an investigation of alleged ties between his 2016 campaign and Russia.

Worries about the situation have added to market doubts over the Trump administration’s ability to deliver a promised boost to growth and recently weighed on the dollar.

The greenback could weaken to as low as 106 yen ahead of Thursday’s testimony, Esparza said. The dollar index, which tracks the greenback against six major rivals, was down 0.24 percent at 96.567.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza