The Japanese yen was largely flat today as trading was somewhat directionless during the current trading sessions, and markets were in a consolidation mode. Over the longer-term, though, the currency should be well-supported by factors that are negative to the risk sentiment.
The continuing trade war between the United States and China gave investors ample reasons for seeking out safe haven, and the yen is a logical choice for those seeking safety. With the USA banning Chinese tech giant Huawei, it looks like the war is escalating, and no compromise between the world’s two largest economies is in sight.
One of the possible reasons for today’s unimpressive performance of the yen were dovish comments from Bank of Japan board member Yutaka Harada. He said:
At present, domestic demand such as capital expenditure and consumption has withstood the decline in external demand and production. But itâs also true that downside risks to the economy are increasing. The impact of the consumption tax hike scheduled for October this year also is a concern.
He then voiced an opinion that the BoJ should bolster monetary stimulus “without delay” if the economy continues to deteriorate.
As for macroeconomic data, core machinery orders rose 3.8% in March from the previous month, whereas experts were not anticipating any growth. The trade balance deficit shrank to ¥0.11 trillion in April from ¥0.15 trillion in March, in line with expectations.
USD/JPY was flat at 110.46 as of 10:50 GMT today. EUR/JPY was about flat at 123.37, rebounding from the day’s low of 123.05. CHF/JPY was at 109.38 after opening at 109.25 and falling to the session minimum of 109.10.
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