- USD / JPY remains depressed following the sell-off from the previous session.
- The US dollar index remains stable above 93.00.
- The Dow Jones lost more than 600 points as risk sentiment weakened on Chinese real estate giant Evergrande.
The USD / JPY continues to trade lower during Tuesday’s initial Asian session. The pair consolidated below 109.50 as risk sentiment deteriorated after Evergrande’s fallout in China. As of this writing, USD / JPY is trading at 109.39 down 0.01% for the day.
The US Dollar Index (DXY), which tracks the performance of the dollar against the basket of six major currencies, remains high near 93.20 with gains of 0.05%. Investors took a safety flight into US bonds amid a global sell-off in financial markets. Benchmark 10-year US Treasury yields fell almost 6 basis points to 1.31% as yields moved inversely with bond prices.
Market assessed the risk of China’s second-largest real estate developer expanding into global markets. The Dow Jones lost more than 600 points, the highest since July, and the S&P 500 lost more than 75 points.
Meanwhile, US Treasury Secretary Janet Yellen has warned that failure to raise the debt ceiling could trigger a historic financial crisis. Comments weighed on the performance of the greenback.
On the other hand, the Japanese yen took advantage of its appeal as a safe haven and caught the attention of traders on Monday. Sentiment was further heightened after the Bank of Japan (BOJ) is expected to keep its policy stable this week, but could offer a darker outlook on exports and production due to the impact of the pandemic.
For now, traders are turning their attention to housing starts, building permits and current account data in the United States to gauge market sentiment.