Yen Rises on Geopolitical Risks and Safe Haven Demand

The safe haven Japanese yen saw capital inflows as traders looked for safety during the Asian trade session. China’s offshore yuan exchange rate fell lower as risk aversion soared. This also sent Asian and Pacific Rim equities plunging lower.

China, today, has announced that the pneumonia-like virus spreading through China is now passing from human to human. A fourth death has just been confirmed.

This disease has been spreading from the central city of Wuhan and is still in its early stages. The concern is that it is starting just ahead of the peak travel season during the Lunar New Year holidays. This could spread this disease even further.

The yen was trading higher against the U.S. dollar during the Asian trade session. The USD/JPY currency exchange rate fell 0.2 percent to trade at 109.97 yen.

The Japanese currency also saw a boost after the Bank of Japan kept its monetary policy and short term interest rates steady for the month. The Bank of Japan also pledged to keep the guidance of the ten year Japanese Government Bond (JGP) at zero percent.

The dollar index, which measures the U.S. currency against six other currencies, was last trading at a monthly high price point at 97.589.

Yen Traders Monitor Global Geopolitical Risks and Economic Data

Traders are also monitoring the recent International Monetary Fund’s global economic outlook report that revised growth expectations down further. Economic uncertainty in the United States is also weighing on sentiment. This is includes the impeachment trial of U.S. President Donald Trump and the coronavirus in China which now spreads from human to human.

There are not a lot of key economic events on today’s calendar.  The United Kingdom is releasing unemployment data. This data includes the unemployment rate, claimant count and three month earnings index.

Out of the European Union, Forex traders will monitor the monthly German ZEW economic sentiment survey. Also on the schedule is the Eurozone ZEW economic sentiment survey.

The economic calendar out of the United States is quiet today with no market moving events scheduled. Canada will be releasing monthly manufacturing data.