Jane Foley, senior FX strategist at Rabobank, notes that the safe havens CHF and JPY are the best performing G10 currencies on a 1 day view, reflecting the poorer tone of oil and stocks and reflects market concerns that tensions between the US and China could rise again.

Key Quotes

“Insofar as markets have been lifted by optimism surrounding the trade deal for some months now, we maintain there is a significant risk that focus will return to the shortfalls of the deal. Largely on the back of this, we see risk of USD/JPY dipping towards the 107.00 area around the middle of the year.”

“US suspicions about Chinese practices have been highlighted by the pressure exerted by China hawks in Washington on the Trump Administration to draft rules that would block more sales to Chinese telecoms giant Huawei.”

“It has been clear for some time that Washington’s misgivings regarding China stretch well beyond trade and into the realms of national security and global hegemony. For this reason we see it as enviable that tensions between the two nations are set to rise again. This has the potential to impact market expectations about world growth, reduce risk appetite and increase demand for the safe haven JPY.”

“The JPY’s function as a safe haven can limit the day to day influence of Japanese policy makers on the exchange rate. That said, the BoJ’s vast QQE policy and its negative interest rate appear to have had some success in undermining the JPY.”

“For now we expect the JPY to be buffeted mostly by changing levels of risk appetite rather than domestic news. Consequently we are looking for a moderately stronger JPY to emerge during the course of the year.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD pressured under 1.11 amid virus fears, ahead of the ECB

EUR/USD is trading below 1.11, under pressure as fears of the coronavirus weigh on markets. The ECB is set to leave rates unchanged and provide views about the current economic environment. 

EUR/USD News

GBP/USD consolidates gains above 1.31 after parliament seals Brexit

GBP/USD is trading above 1.31, consolidating its gains. The House of Lords gave its final seal to Brexit. Speculation ahead of the BOE's decision continues after upbeat data diminished chances for an imminent move.

GBP/USD News

Forex Today: Coronavirus fears spread and weigh on markets, Aussie surges, all eyes on the ECB

Chinese authorities have shut down access links to Wuhan, the large provincial capital where the coronavirus originates from. The news, coming ahead of the Chinese Lunar New Year, is weighing on markets. 

Read more

WTI hits 7-week low, potential bull RSI divergence on 1H

WTI oil fell to $55.68 soon before press time, the lowest level since Dec. 3, having declined by 3.73% on Wednesday. The black gold has found acceptance below $56.60, which is the 61.8% Fibonacci retracement (one of the golden ratio) of the rally from $51.03 to $65.62.

Oil News

USD/JPY drops to fresh eight-day lows near 109.50

USD/JPY extends losses and trades close to an eight-day low near 109.50 in a relatively risk-off environment, with the media headlines full of the coronavirus as it spreads internationally. Bears can look to the golden ratio around mid-108s.

USD/JPY News

Forex MAJORS

Cryptocurrencies

Signatures