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Yen and Safe Havens Retreat as Tensions Fall

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The safe haven Japanese yen has fallen from a three month high price point against the U.S. dollar. Traders are feeling better after President Donald Trump deescalated war rhetoric. For now, a full blown conflict in the Middle East is not a possibility.

Another safe haven Forex asset, the Swiss franc also pared gains. The Swiss franc was at a one week high price point against the dollar. Gold and crude oil also fell lower after spiking higher.

The USD/JPY Forex market has recovered as the yen weakened. Overnight, during the North American trade session the U.S. currency gained 0.66 percent to trade at 109.14 yen. This Forex market is currently up 0.08 percent during the Asian trade session on Thursday.

Traders are now waiting to see if the United States responds to Iran’s attack. The U.S. has confirmed that Iran fired missiles at U.S. military bases in Iraq in response to the killing of General Qassem Soleimani in a drone strike.

As Geopolitical Tensions Deescalate Safe haven Assets like the Yen Fall Lower

However, President Donald Trump in a number of tweets said the assessment of damages was “so far so good!” and “all is well.” This helped calm the global financial markets.

Yesterday, traders were unnerved after Iran attacked U.S. military basis in Iraq. This was in retaliation for the United States killing General Suleimani last week. Market sentiment did improve after President Donald Trump walked back the possibility of war with Iran. Trump also said that he wants a better nuclear deal.

Also, President Trump does not feel it necessary to endanger the lives of U.S. troops in an unnecessary war. U.S. officials also said that Iran appears to be standing down and announced even more economic sanctions against Iran.

The private ADP non-farm payroll change, released on Wednesday, beat expectations for the month of December. The U.S. labor sector added 202K new jobs. Traders will now wait on the non-farm payroll report due on Friday at 1:30 pm GMT.

About David Frank

David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.

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