The Yen got stabilized. Overview for 12.04.2017

The USD/JPY pair got stabilized after yesterday’s sales, but investors still prefer “Safe haven” assets.

The Japanese Yew is being slowly corrected against the USD on Wednesday morning. The current quote for the instrument is 109.68. These levels are lowest for the pair over the last 5 and a half months.

Earlier, the demand for the Yen increased due to geopolitical tensions: at first, the USA expanded their conflict with Syria, and then brought their navy close to the Korean peninsula. Under such circumstances, the Yen is considered to be a “safe haven” asset and investors used it to hedge at least some part of their market risks.

However, too significant strengthening of the Yen has its “downside”. Japanese exporters’ operations get less effective, the QE program from the BoJ provides less support to the country’s economy. Nevertheless, the BoJ, which is already very experienced in controlling the Yen exchange rate, doesn’t interfere, although says that only few people like the way the national currency behaves.

In this case, the inflationary issue is very important. The weaker the Japanese Yen, the closer the target of 2% for the BoJ, and vice versa. According to Mr. Kuroda, the Governor of the Bank of Japan, right now there is no any problems with expanding the monetary base or buying assets, but the regulator is monitoring the situation very closely.

It seems that geopolitical tensions are only starting. The market is well aware of such behavior of the USA and knows that after the first step there will be others. For the Yen, it means that the market will surely turn to this “safe haven”.

RoboForex Analytical Department