Yen surges to 2-month high against the dollar as bond yields fall
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- The Yen climbed to a two-month high against the dollar Tuesday as US bond yields fell.
- Investors looked for cover in safe currencies as US House Speaker Nancy Pelosi landed in Taiwan.
- Markets remain volatile as recession fears linger.
The yen jumped to a two-month high Tuesday, as investors showed confidence shifting bets toward the Japanese currency amid rising tensions between the US and China.
The yen was trading at roughly 131 against one US dollar, compared to 133 a day earlier.
US House of Representatives Speaker Nancy Pelosi went through with plans to travel to Taiwain on Tuesday, even as the Biden administration expressed concerns. The yield on one-year Treasury note fell once Pelosi landed.
Meanwhile, the yen has added to a seven-day rise that saw the currency spike 4.5%. The yen's climb began shortly after the first rate raise from the Fed. The yen jumped to 139 against the dollar last month as investors assumed that the Japanese central bank would continue a path of loose monetary policy while the US tightened.
The yen has also strengthened as the Federal Reserve remains hawkish in its pursuit to tackle high inflation. The Fed announced a benchmark rate hike last week of 75 basis points, which was mostly in line with Wall Street's expectations. Investors came to what may have been a premature consensus that the central bank would reverse course later in the year and halt its tightening schedule, although the debate over the Fed's next move rages on.