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Recent market commentary suggests that the yen's renewed strength could continue to influence global markets, including cryptocurrencies
The Japanese yen (JPY) is gaining strength against the US dollar (USD) once more, signaling a resurgence of the "anti-risk" currency. Since late Thursday, the yen has appreciated by 2.4% to 145 per dollar, reversing a prior weakening trend and outperforming other major currencies like the Australian dollar, euro, and British pound.
This surge in the yen recalls market conditions from early August when yen strength contributed to the unwinding of carry trades—bullish bets financed by low-cost yen loans. As these positions were unwound, risk exposure in global markets decreased, leading to declines in traditional assets and cryptocurrencies. Bitcoin (BTC) notably fell from $70,000 to $50,000 before partially recovering alongside a USD/JPY bounce. Recent market commentary suggests that the yen's renewed strength could continue to influence global markets, including cryptocurrencies. Goldman Sachs' Andrei Kazantsev highlighted how the yen's movements have affected bitcoin and ether, linking the volatility to the yen carry trade unwinds. ING analysts also pointed out that the yen's rise from 161 to 141.68 per dollar earlier this month may set a precedent for future yen buying, potentially skewing risk towards further strengthening.
As the U.S. Federal Reserve's next interest-rate decision looms, market participants are watching closely. Any significant changes, particularly a rate cut, could reignite volatility in global markets, further impacting the yen, bitcoin, and other risk-sensitive assets.
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