The Yen Strengthened Significantly, Yet Was Limited

The Yen again experienced a yen in the starting date of this week. The yen strengthened almost against all currency pairs. This was triggered by market concerns about the possibility of trade war excalation between America and China. Earlier in the week President Trump issued that he would again raise tariffs on import from China.

The administration of US President is expected to declare the extra tariffs on—more or less—300 billion dollars’ worth of Chinese items on Monday. This is another follow up after their last move on Friday when the US dramatically increased the tariff rate on $200 billion worth of Chinese imports, a move intended to punish Beijing for making inversions on past exchange duties.

This statement was responded to by the Chinese Government with the possibility of implementing the same action as an attempt to counterattack.

China’s foreign minister fired back as of revealed that China would not be subject to any pressure from any foreign countries, “won’t be surrender to external pressure.” This is a firm answer to Trump’s statement that China did not respects the agreement between both parties. Previously, Trump issued a threat that China shall not worsen the situation through its trade political moves.

“China should not retaliate-will only get worse!” quoted from Trump’s Twitter. He added that China have to make a deal otherwise they will be hurt badly
As is known before, China withdrew from the agreement to impose international trade rates between the two countries because they were not satisfied with the American proposal.

The Yen is by then the Save Heaven Asset Choice

Market concerns about the increasingly uncertain relationship between the two countries have had a positive impact on the Yen. The market seems to be in droves to shift funds to more stable financial instruments, in this case Yen. The market considers that the Yen is strong enough to not be affected by the influence of trade war between China and America.

Until the end of the New York trading session, the Yen was still monitored to strengthen against the major pair, each of them as much as:

USD 96 pips
GBP 183 pips
EUR 104 pips
Note : (the figures might be different among brokers)

However, given the strengthening of the Yen has been going on for quite a long time, we must be careful of the correction and the possibility of profit taking from market participants. In the range of the next 1-2 days, there is a possibility that the Yen will experience consolidation.

Trade War and Iran Conflict Be the Most Triggering Market-Mover

Since 6 o’clock the USA raises customs duties on certain Chinese products in the volume of approximately 200 billion dollar in the amount of 25 per cent. Beijing has already announced countermeasures, but gave no details.
Since yesterday, the Chinese Vice Premier Liu He is staying for another round of talks in Washington. While today, the negotiators from both sides come together. US President Donald Trump tried to calm markets on Thursday after receiving a “nice letter” from China’s President Xi Jinping, saying that a deal could be signed later this week.

High Fear Market
On Wall Street, this provided relief: During the course of the day, the Dow Jones was -1.7 percent temporarily dropped to its lowest level since the end of March. The final bell was a discount of 0.5 percent. Similar losses recorded the Nasdaq 100. With the increased nervousness, the fear barometer VIX shot temporarily well above the threshold of 20 percent and thus to annual high.
Safe havens such as bonds are sought: the yield on ten-year US government bonds fell to 2.45 percent, and for the first time since March the yield curve has been back inverse. Swiss Franc and Japanese Yen are popular on the foreign exchange markets. By contrast, gold barely profited most recently and costs $ 1,285. In Asia, the Nikkei narrowly fell into negative territory, while China’s stock exchanges rose by around three percent.
Investors are also worried about excalation in the Iran conflict, not only on the oil market. The US recently increased military and economic pressure, while Tehran in part canceled the nuclear deal. Brent conquered the threshold of $ 70 in Asian trade.

Post remains on course
In Frankfurt, the DAX presents itself as friendly at the beginning, with banks rating the market 0.9 percent higher at 12,090 points in early business. Mostly good news came from Deutsche Post. In the first quarter, the logistics company increased its profits disproportionately to sales. The goals for the current year and 2020 have been confirmed.
In addition, the focus is on the largest IPO of the year on Wall Street: Today, the car broker Uber wants to get started, the issue price was set to $ 45. This puts the issue price at the lower end of the range. The overall rating reaches 80 billion dollars.

Yen is Still Strong, The world is Feared by Trade War Again (May 9, 2019)

Another Safe-haven assets other than gold is yen. Lately, yen are quite superior and attract current market players. The warming of political conditions in some countries made the yen chosen by investors.

Quoting Bloomberg on Wednesday (8/5), at 10:30 a.m. WIB, the USD / JPY currency pair weakened 0.15% to 0.1600.

It is said that with heated geopolitical conditions, the yen is now flooded with buyers. Even the yen is preferred over the US dollar because of trade wars.

Just a note, in the two-day interest rate review that ended March 15, the Bank of Japan (BOJ) maintained monetary policy to remain stable despite trimming its assessment of exports and output amid rising global economic risks.

According to our source, President Donald Trump’s statement about the 25% increase in import tariffs on Chinese goods was enough to shake the market.

“Global economic growth is feared to be dragged down as well. So that the yen is considered to have a lower risk,” said Sakti.

We also projected USD / JPY pairing will move in the range of 109.98 to 110.69. From a technical standpoint, JPY-based cross forex is still diverse and has limited potential for weakness.

Volatility also decreases with the downward direction. Indicator VI leads down too. While the TSI indicator leads down. So it is recommended that the selling price is below 109.98 and buy above 110.70.