The Yen is starting a correction. Overview for 27.03.2018

USDJPY continues the impulse that was started yesterday and tries to move away from the low of the last 18 months.

On Tuesday, the Japanese Yen continues retreating against the USD. The current quote for the instrument is 105.61. This week, the pair fell to the levels it reached on November 9^th 2016, but right now it is trying to reach stability.

The main reason why the American currency is recovering today is the piece of information that the USA and Japan are ready to talk on trade conditions diplomatically without any complications that earlier happened between the USA and China. The USA are trying to secure its internal market against goods from Asia, which may be very competitive to similar American goods in the country. Last week, Trump introduced import duties for Chinese goods and China fought back by doing the same for goods from the USA. Based on this, investors assumed that the next country to follow China’s might be Japan.

However, now it’s quite clear that such situation won’t happen again. No one wants this economic warfare, because it hurts both parties.

The internal Japanese scandal involving the family of the country’s Prime Minister Shinzō Abe continues, but it’s not as “hot” as it was. This morning, Nobuhisa Sagawa, the former National Tax Agency chief, said that the Prime Minister Abe had nothing to do with this and “wasn't involved” in doctoring documents. It might be a relief for Abe, but the main problem is that his wife is also thought to be involved in the scandal.

After the Osaka scandal went public, Shinzō Abe’s popularity significantly decreased, which is not the best piece of news. Along with the Governor of the Bank of Japan, Abe is considered as a supporter of the QE program. In case his reputation and political leverage goes down, it may one way or another influence the continuation of the program.

RoboForex Analytical Department