The Japanese yen and the US dollar edged higher in Asia on Friday as investors moved to safe haven after former Japanese Prime Minister Shinzo Abe was shot and market worries intensified ahead of much-anticipated US employment data.
Abe was shot on Friday while campaigning and his condition was unknown.
The yen gained 0.5% in the immediate aftermath of the news before settling at 135.60 per dollar.
“I think the yen is just playing its safe-haven role,” said Bart Wakabayashi, branch manager at State Street in Tokyo.
“FX market players (are) pretty much ingrained in the way they trade,” he said.
The yen fell nearly 16% against the dollar in the first half of 2022 but has recently found support on the risk of a change in central bank policy.
The euro is gradually approaching parity with the dollar as investors fear that an energy crisis fueled by uncertainty about gas supplies from Russia could lead to a recession on the continent.
The euro is down more than 2% this week to touch a two-decade low of $1.0140 in Asian deals. Its decline lifted the US dollar index to a two-decade high, and on Friday it hovered around those levels at 107.080.
“Europe is exposed to large risks around energy dependency, a cost of living crunch on the consumer, and fragmentation risk. This spells euro/dollar lower,” said analysts at Citi.
The Aussie fell on Friday on market sentiment, but the week is set to be robust thanks to China’s announced infrastructure stimulus program, which traders hope will boost demand for commodities.
It was last 0.3% lower at $0.6820. The New Zealand dollar fell 0.2% to $0.6167.
It appears that Sterling has weathered the week of the British political situation with relative success. It was down 0.7% for the week but held most of Thursday’s rebound after the departure of Prime Minister Boris Johnson.
The last time the pound was worth $1.2015.
While rising energy prices hope to undermine confidence and growth in Europe, investors are also concerned about the health of the US economy.
US nonfarm payrolls data is the next indicator to be released on Friday. Economists predict that about 268,000 jobs were added in June. A stronger reading could dampen some recession worries.
“Stronger wage growth will bolster expectations for an even more aggressive Fed policy,” said Commonwealth Bank of Australia strategist Carol Kong in Sydney.
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