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Japanese Yen Rallies in Risk-Off Markets as US Dollar Falls on FOMC

October 31, 2019 at 16:57 by Simon Mugo

Some yen notes and coinsThe Japanese yen today rallied against the US dollar in a risk-off market environment as the greenback sold off after yesterday’s FOMC rate decision. The USD/JPY currency pair today crashed to new lows after the release of upbeat housing and construction data from the Japanese docket.

The USD/JPY currency pair today fell from a high of 108.86 at the start of the Tokyo session to a low of 10.8.06 and was near these lows at the time of writing.

The currency pair opened today’s session trading with a bearish bias following yesterday’s dovish FOMC interest rate decision, which weakened the US dollar. The pair extended its losses after the Bank of Japan released its monetary policy statement, where it kept interest rates at -0.1% as expected. Investors reacted bullishly to Governor Haruhiko Kuroda‘s comments that the BoJwas willing to apply more aggressive easing measures calling his bluff. However, the pair’s most significant decline came after reports that China doubts the chances of making a long-term trade deal with President Donald Trump. China’s comments triggered a flight-to-safety trade, which saw the yen rally against the greenback.

The pair kept falling in the American session after the release of the weak ISM Chicago PMI report for October, which came in at 43.2 versus the expected 48.0. The US Dollar Index also fell to a low of 97.22, which further fueled the yen’s rally.

The currency pair’s future performance is likely to be affected by Japan’s employment data later today and tomorrow’s US non-farm payrolls report.

The USD/JPY currency pair was trading at 108.02 as at 16:56 GMT, having fallen from a high of 108.86. The CAD/JPY currency pair was trading at 82.06 having dropped from a high of 82.67.

If you have any questions, comments, or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

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