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According to analysts from Rabobank market’s assessment regarding safe haven currencies has changed lately. They noted the US dollar this year proved itself to be the safe haven of choice of investors, as a result of various market developments and now the dynamics for USD/JPY are less clear. 

Key Quotes: 

“Even with hugely accommodative monetary policy settings from the Fed, we would expect any further bouts of selling in high yield assets to be associated with a firmer USD in the coming months. That said, in this type of environment, the JPY could still
keep pace with the USD.”

“Just as the safe haven CHF can be particularly sensitive to political tensions in the Eurozone, the JPY can be reactive to geopolitical news in the Asian region. For example, we would usually expect the JPY to push higher on worries stemming from N. Korea. This trend, however, was not necessary discernible this year.”

“True to form the JPY did strengthen vs. the USD on US/China trade tensions through the middle of last year before weakening on optimism of a phase 1 deal in the latter months of 2019. Insofar as it seems likely that China tensions will rise into the US November election, the JPY may again win back ground vs. the greenback in the coming weeks. How far such a move can go, however, could be determined by the overall degree of risk appetite in the market – with any further routs likely favouring the USD.”

“On balance, further jittery trading in a 106 to 108 range looks likely from USD/JPY in the weeks ahead.”