The yen strengthened broadly in New York trading on Nov. 5 as a deepening selloff in US technology shares drove investors out of riskier assets and into the Japanese currency. EUR/JPY slid to 177.23 yen as of 2 a.m. Japan time, moving about 8 sen toward a weaker euro and stronger yen from 177.31 at midnight, and extended losses to 177.09 at one point.
The move was not confined to the euro. AUD/JPY fell to 109.66 and NZD/JPY to 88.46 as the yen advanced across the board, according to the market report.
【What set it off】
The trigger was a sharp reversal in US equities. Selling concentrated in tech names, erasing the gains from the previous day's post-midterm-election rally. The S&P 500 had lost more than $2 trillion in market capitalization by the morning in New York, with semiconductor stocks including NVIDIA, Broadcom, Micron and AMD at the center of the decline. The Nasdaq Composite was down more than 5%.
That combination — a tech-led equity slump alongside falling US yields — is what currency traders watch closely, because it tends to compress appetite for higher-yielding currencies funded in yen.
【The dollar slipped too】
Dollar-yen was also soft, at 157.76 as of 2 a.m. Japan time, about 34 sen weaker for the dollar compared with 158.10 at midnight, and touched a session low of 157.69. A decline in the US 10-year Treasury yield to around 4.82% supported dollar selling, reinforcing the risk-averse yen buying already visible in the crosses.
Earlier in the session, dollar-yen had edged to a fresh high of 158.50 on rising US long-term yields, but the tech selloff chilled sentiment and yields turned lower, sending the pair into a reversal down to around 157.99.
EUR/USD lacked direction, at 1.1234 as of 2 a.m. Japan time, about 0.0020 higher for the euro from 1.1214 at midnight. It was bought back to around 1.1237 on the decline in US long-term yields, but was at times pushed back to around 1.1215 in tandem with the euro's fall against the yen.
【Why equities move the yen】
In foreign exchange, sharp stock market declines feed directly into risk-off currency trading. When investors trim risk assets, funds tend to shift toward currencies seen as relatively safe, and the yen is one of the most liquid of those. The selling of higher-yielding currencies such as the euro, Australian dollar and New Zealand dollar against the yen reflects that change in portfolio stance.
Market participants say the coexistence of expectations for higher US rates and the equity selloff is complicating the drivers of currency moves. Dollar-yen is seen as facing heavy topside resistance in the lower 158 range, while US yield levels tend to provide support on dips, suggesting the pair may continue to trade without clear direction.
【Who is exposed】
The moves matter most to retail traders holding yen crosses — EUR/JPY, AUD/JPY and NZD/JPY — where a stronger yen can amplify losses on long positions in higher-yielding currencies. European traders with exposure to Australian or New Zealand dollars against the yen are particularly affected, since those pairs fell alongside the euro cross.
The next catalyst on the calendar is the October US employment report, scheduled for release at 8:30 a.m. EST on Nov. 6 (10:30 p.m. Japan time), which is drawing attention as a driver for US yields and the dollar.
For anyone trading these pairs, the practical reminder is to verify that your broker is properly regulated and that your account protections are in place before volatility spikes. Sharp cross-currency moves can widen spreads and trigger rapid margin changes, so confirming platform credentials and account security settings through official channels is worth doing ahead of major data releases.
The yen strengthened broadly in New York trading on Nov. 5 as a deepening selloff in US technology shares drove investors out of riskier assets and into the Japanese currency. EUR/JPY slid to 177.23 yen as of 2 a.m. Japan time, moving about 8 sen toward a weaker euro and stronger yen from 177.31 at midnight, and extended losses to 177.09 at one point.
The move was not confined to the euro. AUD/JPY fell to 109.66 and NZD/JPY to 88.46 as the yen advanced across the board, according to the market report.
【What set it off】
The trigger was a sharp reversal in US equities. Selling concentrated in tech names, erasing the gains from the previous day's post-midterm-election rally. The S&P 500 had lost more than $2 trillion in market capitalization by the morning in New York, with semiconductor stocks including NVIDIA, Broadcom, Micron and AMD at the center of the decline. The Nasdaq Composite was down more than 5%.
That combination — a tech-led equity slump alongside falling US yields — is what currency traders watch closely, because it tends to compress appetite for higher-yielding currencies funded in yen.
【The dollar slipped too】
Dollar-yen was also soft, at 157.76 as of 2 a.m. Japan time, about 34 sen weaker for the dollar compared with 158.10 at midnight, and touched a session low of 157.69. A decline in the US 10-year Treasury yield to around 4.82% supported dollar selling, reinforcing the risk-averse yen buying already visible in the crosses.
Earlier in the session, dollar-yen had edged to a fresh high of 158.50 on rising US long-term yields, but the tech selloff chilled sentiment and yields turned lower, sending the pair into a reversal down to around 157.99.
EUR/USD lacked direction, at 1.1234 as of 2 a.m. Japan time, about 0.0020 higher for the euro from 1.1214 at midnight. It was bought back to around 1.1237 on the decline in US long-term yields, but was at times pushed back to around 1.1215 in tandem with the euro's fall against the yen.
【Why equities move the yen】
In foreign exchange, sharp stock market declines feed directly into risk-off currency trading. When investors trim risk assets, funds tend to shift toward currencies seen as relatively safe, and the yen is one of the most liquid of those. The selling of higher-yielding currencies such as the euro, Australian dollar and New Zealand dollar against the yen reflects that change in portfolio stance.
Market participants say the coexistence of expectations for higher US rates and the equity selloff is complicating the drivers of currency moves. Dollar-yen is seen as facing heavy topside resistance in the lower 158 range, while US yield levels tend to provide support on dips, suggesting the pair may continue to trade without clear direction.
【Who is exposed】
The moves matter most to retail traders holding yen crosses — EUR/JPY, AUD/JPY and NZD/JPY — where a stronger yen can amplify losses on long positions in higher-yielding currencies. European traders with exposure to Australian or New Zealand dollars against the yen are particularly affected, since those pairs fell alongside the euro cross.
The next catalyst on the calendar is the October US employment report, scheduled for release at 8:30 a.m. EST on Nov. 6 (10:30 p.m. Japan time), which is drawing attention as a driver for US yields and the dollar.
For anyone trading these pairs, the practical reminder is to verify that your broker is properly regulated and that your account protections are in place before volatility spikes. Sharp cross-currency moves can widen spreads and trigger rapid margin changes, so confirming platform credentials and account security settings through official channels is worth doing ahead of major data releases.
