The yen emerged as investors’ safe harbour of choice on Tuesday, trading near five-month highs due to widespread fears of a slowdown in U.S. growth prompted by escalating tariffs. U.S. stocks and the dollar were rattled, with the Nasdaq falling 4% overnight and the S&P 500 sliding 2.7%. This decline in equities coincided with a significant rally in U.S. bonds, driven by concerns over potential deceleration in U.S. economic growth.
The yen touched a five-month peak of 146.625 per dollar and was last trading at 146.85. Other currency market movements were more subdued, but the notable lack of flight to the dollar, which has been weakening in recent weeks, drew attention from analysts.
Yen rises amid U.S. slowdown concerns
In related developments, the EUR/USD exchange rate surged as the U.S. dollar index and American equities plunged in anticipation of upcoming U.S. inflation data. It rallied to a high of 1.0900. Meanwhile, what had been a steady pullback from the U.S. stock market accelerated sharply on Monday, with investors retreating from virtually every type of risk.
Technology stocks, in particular, experienced significant tumbles. Additionally, Greenlanders are heading to the polls in a pivotal parliamentary election shaped by the ongoing debate over independence from Denmark and recent comments by U.S. President regarding the region. The financial markets remain on edge as policymakers and investors continue to navigate the evolving economic landscape.
