Dollar steady meanwhile yen wobbles as traders assess rate cut bets and carry trades

The dollar held its ground while the yen retreated from a seven-month peak. Currency markets stabilised after a turbulent start to the week driven by recession fears and the unwinding of carry trades. The yen dropped, moving away from its high reached. Despite this dip, the yen has risen and is well above the 38-year low.

Timely interventions from Tokyo in early July and a hawkish shift from the Bank of Japan last week prompted investors to exit carry trades, where they borrowed yen at low rates to invest in dollar-denominated assets for higher returns. Market volatility increased with a weaker-than-expected U.S. job report and disappointing earnings from major tech firms, triggering a global sell-off of riskier assets amid fears of a U.S. recession.

Read more for the latest updates about the Yen’s recent movements here.