Yen Firms as Traders Rush to Safety

The Japanese yen, during the Asian trade session on Thursday, remained firm against other Forex units as traders fled into safe haven asset classes. These asset classes include the yen, Swiss franc and gold.

Traders are spooked by the inverted U.S. Treasury yield curve as well as signs of a global economic slowdown. This drove Forex traders into safe haven asset classes.

Traders fled out of global equities, overnight and into the Asian session today, as they sought safe haven assets. For the first time in 12 years, the Treasury yield curve has inverted signaling a recession in the U.S. economy. This caused Wall Street to sell off as traders exited equities. The Dow Jones Industrial Average (DJIA) fell over 800 points.

A yield curve inversion occurs when two year yields are higher than the ten year yields.

The USD/JPY exchange rate was trading a bit lower fetching 105.86 yen. On Wednesday the dollar shed 0.8 percent to its biggest daily loss in two weeks.

The dollar index, which measures the dollar in a basket against six other currencies, was trading at 97.955. The dollar index gained 0.2 percent on Wednesday.

Forex Traders Worry about the Yield Curve and Support Safe Havens like the Yen

Traders worry when the Treasury yield curve inverts as that signals a recession. The ten year Treasury bond yield is at its lowest level in three years. The 3o year note is now below two percent, which is the floor for the Federal Reserves policy rate.

Trader sentiment was already bad before this rattled the markets after economic data showed that the German and Chinese economies were under pressure from the ongoing trade war between the U.S. and China.

This will continue to boost safe haven asset classes today including gold and other low-risk assets.