Japanese Yen Scores Notable Comeback As US-China Tensions Trigger Fears

Updated:

The Japanese yen (JPY) has recorded one of its aggressive rallies against the US dollar (USD) in a long while, as the USD/JPY pair tapped the 130.39 low.

The solid performance in the yen comes amid rising US-China tensions over a Taiwan visit by US Representative Speaker Nancy Pelosi. Worries over the outcome of this visit have spurred massive capital outflows to safe-haven assets like the Japanese yen.

Japanese Yen Prints Multi-Week Low As US Bonds Sink

The yen posted a consecutive four-day gain against the dollar but lost the initiative in the London-New York session on Tuesday, with its total five-day decline of around 4.7%. The USD/JPY pair tapped the 130.39 low, a level not seen in early June.

Fears over the impact of the upcoming Taiwan high-profile visit sent investors running in all directions, pulling the stock market down as investors scurried into US Treasuries.

The benchmark 10-year Treasury yield dropped to 2.516%, its lowest figure since April. This decline in the US bonds market further closed the gap between the 10-year US debt and the equivalent Japanese bonds to 2.36%, the lowest figure since April.

In other news, the US economy contracted for a second consecutive quarter, triggering a technical recession. For now, traders would keep a close eye on other economic growth metrics, like the US jobs data ready for release on Friday.

Commenting on this, head of FX strategy at Saxo Bank John Hardy noted: “US data releases and the reaction in the US yields through the end of this week will be critical as JPY momentum has built a considerable head of steam here.”

 

You can purchase Lucky Block here. Buy LBlock

  • Broker
  • Benefits
  • Min Deposit
  • Score
  • Visit Broker
  • 20% welcome bonus of upto $10,000
  • Minimum deposit $100
  • Verify your account before the bonus is credited
$100 Min Deposit
9
  • Award-winning Cryptocurrency trading platform
  • $100 minimum deposit,
  • FCA & Cysec regulated
$100 Min Deposit
9.8
  • Over 100 different financial products
  • Invest from as little as $10
  • Same-day withdrawal is possible
$100 Min Deposit
9.8
  • Award-winning Cryptocurrency trading platform
  • 14 Cryptoassets available to invest in
  • FCA & Cysec regulated
$200 Min Deposit
9.8

Highly volatile unregulated investment products. No EU investor protection.

  • Trade top Cryptos such as Bitcoin, Litecoin and Ethereum plus more
  • Zero commissions and no bank fees on transactions
  • Around the clock service with support in 14 languages
$100 Min Deposit
8.5
  • The Lowest Trading Costs
  • 50% Welcome Bonus
  • Award-winning 24 Hour Support
$200 Min Deposit
9
  • Fund Moneta Markets account with a minimum of $250
  • Opt in using the form to claim your 50% deposit bonus
$250 Min Deposit
9
Share with other traders!

Azeez Mustapha

Azeez Mustapha is a trading professional, currency analyst, signals strategist, and funds manager with over ten years of experience within the financial field. As a blogger and finance author, he helps investors understand complex financial concepts, improve their investing skills, and learn how to manage their money.