The yen continued to trade lower against the dollar during European trading, while U.S. Treasury yields edged higher. U.S. macro data on Wednesday showed the economy remains resilient and inflation has stalled, suggesting the Federal Reserve may be cautious about further policy easing. That in turn triggered a small rebound in U.S. bond yields, helping to revive demand for the dollar and seen weakening the lower-yielding yen.
In addition to this, the generally positive risk tone is another factor contributing to outflows from the safe-haven yen. Still, concerns about U.S. President-elect Donald Trump’s tariff plans, geopolitical risks stemming from the Russia-Ukraine war and speculation that the Bank of Japan could raise interest rates again in December appear to be driving the yen. Traders also appeared reluctant, keeping an eye on Tokyo consumer inflation data on Friday before making new bets.
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