USD/JPY Fundamental Daily Forecast – Yen Rises on Flight-to-Safety Buying Fueled by Trade Concerns

The Dollar/Yen is trading lower shortly before the U.S. opening. The Forex pair is trading inside yesterday’s range which suggests investor indecision and impending volatility.

At 0959 GMT, the USD/JPY is trading 111.510, down 0.202 or -0.18%.

Volatility has been highlighted this week, first by the Bank of Japan’s monetary policy decision on Tuesday and then by the U.S. Federal Reserve’s interest rate decision and monetary policy statement on Wednesday.

To recap, the Bank of Japan pledged to keep rates low for an extended period, even as it made modest tweaks to its policy. On Wednesday, the Fed kept interest rates unchanged as widely expected and said U.S. economic growth has been rising strongly and the job market has continued to strengthen.


The risk off tone in the financial markets early Thursday is helping to drive the USD/JPY lower. The selling pressure actually started on Wednesday after President Donald Trump proposed a higher 15 percent tariff on $200 billion worth of Chinese imports.

This fueled a sell-off in the Dow Jones Industrial Average and S&P 500 Index markets, while driving up demand for the safe-haven Japanese Yen.

Early price action in the U.S. stock futures markets on Wednesday point to further losses in the major indexes including the NASDAQ Composite. At 1004 GMT, the Dow is down about 169 points, the S&P 500 is down 16.75 points and the NASDAQ is trading 53.25 point lower.

Dollar/Yen traders are likely to set aside thoughts about central bank policy, today’s U.S. economic reports and Friday’s major U.S. Non-Farm Payrolls report, on Thursday, as they are likely to take aggressive positions in the safe-haven Yen if investors continue to shed risky assets throughout the day.

U.S. economic reports today include the Challenger Job Cuts, Weekly Unemployment Claims and Factory Orders. Early Friday, the Bank of Japan will release its monetary policy minutes. This will be followed later in the session by the U.S. Non-Farm Payrolls report.

Published by

James Hyerczyk

James A. Hyerczyk has worked as a fundamental and technical financial market analyst since 1982. His technical work features the pattern, price and time analysis techniques of W.D. Gann.