The yen strengthened for a fourth consecutive day against the dollar, as falling US Treasury yields supported a broader rally in emerging-market currencies across Asia. The shift comes after fresh economic data sustained market expectations for the Federal Reserve to potentially ease its monetary policy.
European stock futures indicated modest gains, while trading in Asia remained mixed. Japan’s stock market, highly sensitive to its export sector, fell as the yen climbed to around 141 per dollar, pressuring exporters. In contrast, stock benchmarks in Australia and Hong Kong rose, following a fourth day of gains on Wall Street.
Policy-sensitive two-year US Treasury yields dropped six basis points during Asian trading, further weighing on the dollar. This shift bolstered the performance of Asian currencies, including the Korean won, continuing a rally that began in Latin America. The drop in Treasury yields reflects investor uncertainty over the size of the Federal Reserve’s anticipated interest rate cut in its upcoming policy meeting next week.
The market debate intensified after data showed the US producer price index (PPI) picked up slightly in August, following a revision of July’s numbers downward. Additionally, an uptick in unemployment benefit applications heightened concerns over a weakening US labor market, adding to speculation that the Fed may choose to adopt a more accommodative monetary stance.
