Reversing previous session’s uptrend, the Japanese yen edged lower against its major rivals on Tuesday morning in New York as the credit rating agency Fitch’s reaffirmation of the U.S. debt’s AAA rating with a stable outlook boosted traders’ risk sentiments, prompting them to reduce positions in lower-yielding currencies. The better-than expected U.S. industrial production report also helped lift the sentiments.
Fitch Ratings affirmed the U.S. ‘AAA’ credit rating with a stable outlook, citing the nation’s ability to raise revenues and absorb another economic crisis. This was in contrast to rival Standard & Poor’s downgrading of the U.S. credit rating earlier this month to one notch below AAA. Another rating agency Moody’s Investors Service also affirmed the U.S.’s ‘AAA’ ranking on August 8.
The U.S. Federal Reserve released a report showing that industrial production for the month increased by more than economists had been anticipating. According to the report, industrial production rose by 0.6 percent in July following an upwardly revised 0.4 percent increase in June. Economists had been expecting production to increase by about 0.5 percent compared to the 0.2 percent growth originally reported for the previous month.
Additionally, the Federal Reserve said that the capacity utilization rate climbed to 77.5 percent in July from an upwardly revised 76.9 percent in June. The capacity utilization rate had been expected to edge up to 77.0 percent.
The Japanese yen that traded higher in the previous session erased some of its gains against most major currencies shortly after the report and Fitch’s re-affirmation. The yen is presently quoted at 110.68 against the euro, 126.0 versus the pound, 80.43 against the Australian dollar, 64.22 against the NZ dollar, 78.15 against the Canadian dollar and 76.84 against the US dollar. However, the yen traded higher against the other lower-yielding currency, the Swiss franc, hitting 97.33 around 10:20 am ET.