Currency market: Yen catches investors’ attention
Currency market: Yen catches investors’ attention. Yen is balancing near support at 108.4, the third time in five months coming to this level. The weakness of the dollar due to the tough position of Trump on the North American trade agreement, as well as the growing tensions in the region pushes investors into a quiet harbor.
Trump took a rather tough position on the NAFTA trade agreement and threatened to dissolve the government if his demands for a wall on the border with Mexico were not met. This position is not liked by dollar investors, since any confrontation is worse than a search for a political consensus.
But not only the North American trade agreement can be revised. Increasingly, it is a question of a quiet trade war with China, especially given the recent accusations by Washington of the PRC of technical assistance to the DPRK.
Nuclear tension between the United States and North Korea leads to an outflow of speculative capital from the nearest regions of a possible conflict (China and South Korea) to the traditional quiet harbor – the Japanese yen. Given the military exercises that have been launched in South Korea and the United States in this region, the risk of a preventive strike from Pyongyang remains high.
As a result, USD / JPY may go down by 108.4 and if this level fails, the 102.0 decline will continue, and this may already happen in the September benchmark.