Fundamental Comment

Yen strengthens to 7-month high as safety demand continues

Yen strengthens to 7 month high as safety demand continues

The Japanese yen continued to rise in currency markets as persisting geopolitical tensions prompted investors to turn to the Japanese currency as a safe-haven, helping it to hit its highest level in more than seven months versus the U.S. dollar.

The USDJPY pair fell to its lowest level since mid-December at 105.05, before resuming the decline today to trade at 105.18.

Investors’ mistrust in the face of market crises has helped to increase demand for the safe-haven Japanese yen. With the currency crisis in Argentina, the turmoil in Hong Kong and growing signs of deteriorating global growth, investors have found no better refuge than the yen.

Expectations are growing in the markets that the United States and China will not reach a quick solution in their trade war, along with expectations that the Fed may resort to further easing in monetary policy, caving to pressure from President Donald Trump.

The Argentinian peso saw a collapse at the beginning of the week, falling by 30 percent to the level of 65 pesos per dollar, before reducing losses to about 15 percent and near the levels of 53 pesos to the dollar.

The deterioration in Argentina's currency comes after Argentine President Mauricio Macri incurred a heavy loss in the elections, pushing shares in Argentina to the lowest level in 18 years.

The euro fell during the day and recorded the lowest level against the dollar at 1.1181 after opening the day at 1.1212. The common currency dropped after the ZEW statistic for economic confidence signaled a drop in the euro area to -43.6 after a previous reading of -20.3.

The dollar index witnessed a volatile trading today, hovering around 97.27, after opening the day at 97.21 and recorded the highest level at 97.44.

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