USD/JPY on a downtrend as safe haven strengthens

by Oct 13, 2020Market Reviews

USD/JPY on a downtrend as safe haven strengthens

Volatility lies ahead as we head into the election season. One of the places investors and traders like to park their money is the iconic Safe Haven, the Japanese Yen.

USD/JPY on a downtrend

After the initial spike in the US dollar strength, the Japanese Yen strengthened against the US dollar by around 5.2%. Not as drastic as commodity pairs such as the Australian Dollar against the US dollar; however, the trend of the strengthening of the Yen has been consistent and strong.

Many banks see a strengthening in the Yen against the US dollar as we enter volatile times ahead. Bank of America’s Global FX Team stated that they predict to see the USD/JPY pair at 103, citing the “reintroduction of COVID-19 measures in most countries, particularly in Europe”. They further state that the Yen has gotten stronger during the recent periods of weakness in the stock markets.

US weakening providing tailwinds for the Yen

However, it’s not just the Yen that is in the picture. Weakness in the US dollar may provide tailwinds for the Yen. Many large institutions such as Goldman, UBS, and Invesco predicting a weaker dollar, citing Biden extending his lead over President Donald Trump.

Japan has not been in the news much regarding their Coronavirus response. Similarly to Australia, they went with no lockdown opting for social distancing and face masks, trusting citizens to continue their life with the Coronavirus in mind. However, just like Australia, the method backfired. They experienced their second wave, which was larger than the first. They have since tamed the Virus, however, at a significant cost. The political risk of a sudden change in Prime Minister saw the Yen jump.

With elections coming up ahead, there is a high chance we see the Yen rally against the US dollar in the future.

 

Related Posts

Gold continues to fall

Gold continues to fall

Gold continues to fall on positive vaccine news, as both Pfizer and Moderna reveal trials that show 90%+ efficacy vaccines against the Coronavirus.

Gold breached a fundamental Fib level at $1,835, looking for a next internal support/resistance level at $1,800 and the 50% retracement level at $1,761.

read more
Week ahead – PMI’s, Speeches and GDP

Week ahead – PMI’s, Speeches and GDP

As the news cycle slows, with the election in the past alongside initial vaccine hype fading away, it is essential to realize that not only is the Coronavirus continuing to ravage the economy, it continues to ravage the families and lives of many around the world.

Many have turned the Coronavirus into a statistical exercise, looking into the future when we eventually look past the Coronavirus. However, it is currently a present problem, with present consequences. Keep this in the back of your head when you trade and invest. Here is your week ahead.

read more
Stock of the week: Transurban (TCL)

Stock of the week: Transurban (TCL)

With the vaccine on the horizon, I was thinking about an industry that should indirectly benefit from an increase in worldwide economic activity. For example, we can safely assume that airline equities will rally on the back of confirmation of a working vaccine. However, ancillary services to airlines should follow through with the airline rally, for example, companies who make the food for the airlines or airports.

read more

Black Bull Group Limited (trading name: BlackBull Markets) is a New Zealand registered and incorporated company (company number: 5463921).
We are also registered with the Financial Services Provider Register (number: FSP403326).

Black Bull Group UK Limited is registered in United Kingdom, Company Number - 9556804. Payment clearing services provided by: BlackBull Group UK Limited (Company Number - 9556804) Address - 483 Green Lanes, London, Greater London, United Kingdom, N13 485

Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.

All payments related to the Paysafe Group are facilitated by Black Bull Group Limited.

Copyright © 2019 Black Bull Group Limited. All Rights Reserved.

Share This