European session review: JPY appreciates amid risk aversion

JPY gained against most of its major rivals in the European session on Thursday as demand for the safe-haven assets renewed amid growing worries about the strength of the global economic recovery.

The data from Johns Hopkins University revealed on Wednesday that the total number of confirmed global Covid-19 cases passed 185.1 million and deaths exceeded 4 million, as the virus' delta variant spreads quickly around the world. The spread of a more infectious variant of the coronavirus raised worries about a slowdown in global economic recovery.  In an attempt to combat the virus, Japan’s government declared an extension of the state of emergency for Tokyo through late August. 

Investors also continued to digest the minutes from the U.S. Federal Reserve’s last meeting, which indicated that the Fed’s policymakers continued to stay in a wait-and-see mode in June, as the bank’s “standard of "substantial further progress" [on job growth and inflation] was generally seen as not having yet been met, though participants expected progress to continue”. However, the minutes also revealed that “various participants mentioned that they expected the conditions for beginning to reduce the pace of asset purchases to be met somewhat earlier than they had anticipated at previous meetings.” Overall, the Fed’s policymakers “agreed, according to the minutes, to continue assessing the economy's progress” toward the central bank’s goals and to begin to discuss their plans for adjusting the path and composition of asset purchases in coming meetings. In addition, they reiterated their "intention to provide notice well in advance of an announcement to reduce the pace of purchases".