Forex - Yen higher on safe-haven buying

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Investing.com - The U.S. dollar traded lower against the Japanese yen during Wednesday's Asian session as traders sought a safe-haven alternative to the greenback as the government in the world's largest economy is mired in a risky shutdown.

In Asian trading Wednesday, USD/JPY fell 0.20% to 97.83. The pair was likely to find support at 97.50, Monday's low, and resistance at 99.14, Thursday's high.

The yen was bid higher as traders digested the idea of U.S. government shutdown. The lack of compromise between U.S. lawmakers regarding the Affordable Health Care Act led to a temporary halt in non-essential government services.

The current shutdown is projected to reduce GDP growth by roughly 0.1% each day. Analysts expect the shutdown to be over within the week as Republicans and Democrats could reach an agreement on the U.S. government budget as the debt ceiling deadline draws closer.

The shutdown, the first since the 1990s, forced traders to gloss over solid U.S. data. On Tuesday, U.S. released a stronger than expected ISM manufacturing PMI, which showed a rise from 55.7 to 56.2 for September.

Earlier Wednesday, the Bank of Japan said Japan's monetary base rose to 46.1% lat month from 42% in August. Analysts expected a September reading of 45.3%.

Reports confirmed that Prime Minister Abe is already set to implement the sales tax increase from 5% to 8% by April next year and this could weigh on Japan's overall economic growth. As for the U.S., the Federal Reserve is likely to keep its stimulus measures in place and make no reduction of the bond purchase program until the end of the year.

Elsewhere, AUD/JPY slipped 0.58% to 91.59 while EUR/JPY lost 0.26% to 132.22.


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This article appears in: Investing , Forex and Currencies

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