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Japanese Yen Rose Slightly Due to Safe-Haven Demand

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Dec. 15 2015, Updated 7:28 a.m. ET

Yen rose due to safe-haven demand

The Japanese yen was trading with a slightly stronger bias against the US dollar on December 14, 2015. Investments increased in the safe-haven currency. Falling oil prices, diminishing investments in crude, and the depreciating Chinese yuan by the PBOC (People’s Bank of China) raised concerns about an early rate hike by the US Fed. The global economy’s health seems uncertain considering the low worldwide inflation and geopolitical tensions prevailing in and around the Middle East.

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The yen has been rising due to major risk aversion before the FOMC (Federal Open Market Committee) meeting on Thursday. However, divergence in the monetary policy between the US Fed and the BoJ (Bank of Japan) might catch investors’ attention in case of hawkish action by Fed Chair Janet Yellen this week. This could spur increased selling in the yen.

Industrial production is in line with the estimates

For October, Japanese industrial production recorded 1.4% growth on a month-over-month basis. It met the forecasts. It grew 1.1% in the previous month. On a YoY (year-over-year) basis, the industrial production in Japan fell by 1.4% in October. It met the expectations. It fell 0.8% in September. On a monthly basis, the capacity utilization fell in October to 1.3% from 1.5% in September.

Impact on the market

The iShares MSCI Japan Index ETF (EWJ) was trading 0.92% higher at the close of trade on December 14, 2015. On the other hand, the WisdomTree Japan Hedged Equity ETF (DXJ) ended positive by 0.73%.

Japanese ADRs (American depositary receipts) on US exchanges were trading on a negative note. Leisure goods maker Sony (SNE) rose by 1.3%. In the banking arena, Mitsubishi UFJ Financial (MTU) rose by 0.97% while Sumitomo Mitsui Financial (SMFG) rose by 0.80%.

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