Yen heads for the biggest streak of gains in two years ahead of Pelosi’s visit to Taiwan

The yen is set for its biggest streak of gains since the height of the coronavirus crisis in March 2020, as escalating US-China tension over Taiwan and heightened fears of a global economic slowdown boosted the attractiveness of assets that are considered safe investments.

The US dollar has struggled broadly, continuing a few tough trading sessions since the Federal Reserve raised interest rates last week, amid signs that the US economy is slowing, and policymakers hinting at moving at a slower pace to raise interest rates in the future.

The Japanese currency headed for gains for the fifth consecutive session on Tuesday against the dollar, bringing its cumulative gains to nearly 4.5 percent in five sessions.

The currency rose in London trading 0.6 percent to 130.78 yen to the dollar, slightly less than the high level of 130.40, which was last seen in early June.

Concerns about the impact of an impending visit to Taiwan by US House Speaker Nancy Pelosi have weighed on stocks, and prompted investors to rush into US Treasuries.

Yields on the benchmark 10-year Treasury fell to 2.516 percent, the lowest level since April, reducing the gap between 10-year US debt and its Japanese bond equivalent to 236 basis points, the lowest level since early April.

Last week’s data showed that the US economy contracted for the second consecutive quarter, adding to the debate over whether the country has entered, or will soon enter, a recession. Traders are awaiting US jobs data on Friday.

The Australian dollar fell nearly 1.5 percent after the Reserve Bank of Australia raised interest rates by 50 basis points to 1.85 percent, in line with expectations.

The dollar index, which measures its value against six major currencies, rose 0.3 percent to 105.65.