Yen is declining against the dollar

The yen is declining against the dollar in today’s session, given the rise in risk appetite and the oil price hike. It’s important to highlight that the market is expectant about the FOMC’s meeting at the 24th of June and about the possible announcements made afterward.

Right now is trading at 96.848

Japanese industrial production
The Japanese industrial production was worse than expected.

Current: 5.9% m/m (-29.5% y/y).
Previous: 5.9% m/m (-30.7% y/y).
Current: 7.0% m/m (-28.8% y/y).

I saw this news today on ACMs news section, don�t think this will help the yen so much�.


I would just like to ask, why does it seem that when risk aversion emerges, the USD loses its ground with the JPY? Whereas if it was the EUR or the GBP, it manages to appreciate…

Does it mean that the JPY is much safer than the USD?

What factors do interplay in this?

Thank you very much!

Good question. During the “good times”, money is moving abroad seeking better returns. When risk aversion returns it moves back home and back to safety. In the case of the USD/JPY the JPY will be getting stronger, not necessarily because traders think the Japanese economy is outshining the US economy, but because any borrowing of JPY to fund investments in USD will be unwound trying to return those borrowed funds.

Today was also interesting watching the USD/JPY failing to break through 92. Here’s a good article that covers recent sentiment and the upcoming week Japanese Yen to Gain as Carry Trades Follow Stocks Lower

Another bounce off of 92 today and RSI is nearing 30. Not in my nature to try to pick bottoms, but could be an interesting setup.

The dollar is trending higher against the yen, trading at 95.227. Pay attention to the meeting between Geithner, Bernanke and the Chinese government representatives. Among the main themes is the dollar’s weakness and China’s wish to seek an alternative as a global reference reserve currency.

If the pair keeps trending higher, the next resistances are found at 95.30 and 95.50. If the pair weakens, the nearest supports are found at 95.00 and 94.60 yens per dollar.

PS: great response, when I first started trading I had the same doubt about saves heavens and risk aversion after announcements and your answer is very good.