Ella 
The Japanese yen (JPY) closed higher for a second straight day on Thursday, returning to a more than two-week high hit a day earlier. Concerns that deepening conflicts in the Middle East may trigger a larger-scale war, as well as concerns about slowing economic growth in China, the world’s second largest economy, continue to be a “tailwind” for the Japanese yen’s risk aversion. Combined with the Bank of Japan’s (BoJ) hawkish bias last week, these are another factor weakening the yen.
In addition, further declines in U.S. Treasury yields, resulting in a narrowing of U.S.-Japan interest rate differentials, also appear to be beneficial to the Japanese yen. Meanwhile, Wednesday’s disappointing U.S. ADP report and a slide in U.S. bond yields failed to help the U.S. dollar (USD) capitalize on a recovery from one-week lows following Wednesday’s FOMC meeting. This further aggravates the tone of quotes on the USD/JPY currency pair. Nonetheless, the Federal Reserve’s less dovish interest rate outlook should limit any meaningful downside for USD/JPY.
