By Kevin Buckland
In the midst of the worst sell-off in almost a month on Wall Street and big losses for Asian stocks, the safe-haven Japanese yen has rallied while riskier currencies like the Australian dollar and sterling have languished. This comes following some soft U.S. manufacturing data, raising concerns about a hard landing for the world's biggest economy.
According to Michael Brown, senior research strategist at Pepperstone, the poor factory figures have triggered a significant market response, highlighting the heightened sensitivity of market participants to incoming data, especially downside surprises.
The yen strengthened against the dollar, tracking long-term U.S. Treasury yields which dropped significantly overnight. While the dollar remains firm against most major peers, the Swiss franc and other safe-haven assets have also seen gains.
As investors flock to the safety of bonds, cryptocurrencies have also taken a hit, with bitcoin and ether slipping. Traders have raised odds of a 50 basis point Federal Reserve interest rate cut in September, reflecting growing concerns about the U.S. soft-landing scenario.
With important job data releases scheduled for the week, including Friday's U.S. jobs report, investor confidence remains on edge. The weak Institute for Supply Management survey has added to worries about the Fed potentially being too late to act.
Overall, the market turmoil and economic uncertainties are driving investors towards safe-haven assets like the Japanese yen and Swiss franc, while also raising concerns about the future of the U.S. economy. It is crucial for investors to stay informed and monitor key data releases to make informed decisions about their portfolios.
