USD/JPY bounces off seven-month low but remains below 120.00

Posted On 25 Aug 2015

USD/JPY recovered some of Monday’s losses and rose more than 1 percent in Asian trading on Tuesday to 120.00, bouncing off a seven-month low of 116.15, following a big sell-off brought on by worries about slowing Chinese growth.

Over the two-previous days, USD/JPY tumbled 4 percent as the recent turmoil in global financial markets whittled down bets that the Federal Reserve will raise interest rates in September.

Besides receding expectations for a Fed rate rise in September, the dollar has also come under pressure as market turmoil prompted the unwinding of carry trades funded in the low-yielding euro and yen.

In times of financial stress, the euro and yen are bought back as investors unwind positions in trades that entail higher risk but also higher potential return.

EUR/USD slid 0.7 percent to 1.1537. The pair was at a seven-month high of $1.1715 on Monday, when it surged from a low of 1.1370.

AUD/USD climbed 0.8 percent to 0.7215, having pulled up from a six-year trough of 0.7044 touched on Monday.

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