The Japanese Yen is stronger across the board for no reason other than the panic selling in US stocks
The Japanese Yen is stronger across the board for no reason other than the panic selling in US stocks. There was no economic data released last night and machinery orders are the only piece of data due for release this evening. We continue to stress that the Yen crosses will take its cue from the movements in US stocks. Although the Shanghai index rebounded on Thursday morning, the sharp sell-off in the Dow today could prompt a reversal in Chinese stocks. Risk aversion is rising and carry trades are the primary victims. Further losses are very likely, but we will probably not see major losses as many central banks are still on track to raise interest rates this year. The Bank of Japan on the other hand has no reason to alter rates as the strength of the yen will automatically tighten their economy.