The Japanese Yen rebounded against the US Dollar in Asian trading on Tuesday, ending a two-day losing streak after a Japanese government bond auction attracted record demand.
Meanwhile, mounting political uncertainty in Europe continued to unsettle financial markets.
The auction of 20-year Japanese government bonds attracted bids equivalent to 5.84 times the amount on offer, comfortably surpassing the 4.01 ratio recorded at last month’s sale. The strong demand helped lift the Yen by 0.2% to 158.15 per US Dollar.
The record demand for 20-year Japanese government bonds suggests that investors are beginning to deploy cash that had previously been sitting on the sidelines, Reuters reports.
Japanese government debt is also increasingly being viewed as a relative safe haven amid political and fiscal uncertainty in Europe, particularly in France.
The Yen has also held relatively firm against other major currencies, including the Euro and Swiss Franc. This suggests that rising domestic yields and renewed demand from institutional investors are providing more sustained support for Japanese assets, even as a stronger US dollar continues to weigh on the USD/JPY exchange rate.
Following the auction, the yield on Japan’s 20-year government bonds fell by six basis points to 3.71%.
In France, authorities imposed curfews in several cities on Monday in an effort to contain nationwide anti-government demonstrations, adding to the turmoil surrounding President Emmanuel Macron’s final months in office. Meanwhile, Italy announced plans to deploy 500 troops following two days of unrest.
The Euro gained 0.2% to $1.1234, while futures on French government bonds climbed 0.2%. German Bund futures also edged up 0.1%.
In addition, the British Pound advanced 0.4% to $1.3351, while the Australian Dollar edged up 0.1% to $0.6989. The New Zealand Dollar also strengthened, gaining 0.4% to $0.5684.
The US Dollar index, which tracks the greenback against a basket of six major currencies, slipped 0.2% to 101.77. The index remained near the lower end of its trading range for the month as pressure on the Euro eased.
Elsewhere, the Canadian Dollar rose 0.2% to C$1.40775 per US Dollar, approaching its strongest level in a month. The currency was largely unchanged after Alberta residents voted against taking the first steps towards a binding independence referendum, in the province’s first-ever vote on the issue.
The offshore Chinese Yuan gained 0.1% to 6.678 per Dollar after the People’s Bank of China left interest rates unchanged, as markets had expected.