Yen Surges Amid Wall Street Sell-off and Weak US Manufacturing Data

The Japanese yen rallied as traders sought safety following significant sell-offs in Wall Street and Asian stocks. Weaker U.S. manufacturing data spurred fears of an economic downturn, affecting riskier currencies. Investors anticipate U.S. payrolls data and job openings reports for further market direction.

The safe-haven Japanese yen rallied on Wednesday as riskier currencies like the Australian dollar and sterling languished. Traders ducked for cover after the worst sell-off on Wall Street in nearly a month and significant losses for Asian stocks.

The catalyst was soft U.S. manufacturing data that fanned fears of a hard landing for the world's largest economy, with traders already on edge ahead of crucial monthly payrolls data due on Friday. 'The bears are back with a bang,' said Michael Brown, senior research strategist at Pepperstone, who noted that poor factory figures alone did not justify such a large market response.

The yen strengthened as much as 0.4% to 144.89 per dollar before last trading up about 0.2% at 145.15 at 0525 GMT, following a 1% rally overnight. The dollar saw mixed performance, firm against most major peers but softer against the yen. The Swiss franc, also a safe haven, strengthened about 0.26% to 0.8480 per dollar. Cryptocurrencies faltered; bitcoin and ether slipped about 2.9% and 3.4%, respectively.

(With inputs from agencies.)