Dollar steadies as yen surges on risk-off sentiment before US jobs data

Global financial markets shifted towards caution on Tuesday as a broad equity sell-off triggered a flight to safety among investors. The Japanese yen emerged as a clear beneficiary of the risk-averse mood, gaining 0.2% to touch 157.40 per US dollar—its highest level in seven days—before trimming those advances slightly.

The broader currency market saw the US dollar maintain its footing despite the yen's strength, as investors simultaneously sought shelter in fixed-income securities and traditional safe-haven assets. Bond yields declined as traders repositioned portfolios away from equities, reflecting heightened caution in financial markets across the region and globally.

The pullback in risk appetite comes as investors prepare for the release of US non-farm payroll data, a closely watched economic indicator that typically influences currency and equity movements. Traders are adopting a more defensive stance ahead of the employment report, which could provide fresh signals about the strength of the world's largest economy and influence expectations around interest rates.

Market analysts noted that the combination of equity weakness and upcoming economic data has created an environment favourable to defensive positions. The yen's appreciation, driven by its status as a low-yielding currency that benefits when investors reduce risk exposure, underscores the shift in investor sentiment witnessed across Asian and international markets.