Yen Retreats, Retains Support from Safe-Haven Demand

The Japanese yen retreated a bit today following yesterday’s rally. The currency remains relatively strong though thanks to wide-spread demand for safe currencies among Forex market participants.
Safe-haven demand was driving the yen up previously and still remains a supportive factor for the currency. While it is usually news from Europe that make traders worried, yesterday’s economic data from the United States was not good as well, fueling risk aversion on the FX market. Both the US services Purchasing Managers’ Index and factory orders disappointed market analysts.
As for macroeconomic indicators from Japan itself, the monetary base expanded in December, suggesting that stimulating measures from the Bank of Japan have effect. The monetary stimulus remains a negative factor for the yen, but at for the time being need for safety plays a bigger role in the currency’s performance.
USD/JPY ticked up from 118.38 to 118.76 as of 00:08 GMT today after falling 1 percent yesterday. EUR/JPY edged higher from 140.75 to 141.03 following the 1.4 percent drop during the previous trading session, and GBP/JPY went up from 179.33 to 179.74 after tumbling as much as 1.7 percent yesterday.

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