JPY gains over renewed virus fears

Chris Lee
Safe haven surge over renewed virus fears

The international forex markets once again revealed their capacity for speedy turnarounds on Friday as traders moved suddenly and wholeheartedly in the direction of risk-off currency assets.

The Japanese yen, which is known for being a major safe haven due to its status as a global creditor, was up over the course of the day – largely at the expense of the world’s riskier currencies.

The currency was seen up by two-fifths of a percentage point to its best performance in a fortnight – 106.81.

The shift away from global risk was attributed in part to reports from the US that the outbreak there is worsening at an alarming rate.

Over 60,000 new cases of the coronavirus were noted yesterday (Thursday), which is the worst ever number from any nation around the world since the crisis began.

In other regions, such as Australia and Japan, majorities found themselves grappling with a new-found rise in infections.

Despite the serious public health nature of the new outbreaks, many traders appeared to primarily be fearful that the spikes could put the world’s economic recovery at risk.

There was some suggestion, for example, that restaurants and shops in the US might be seeing dips in the number of customers coming through the door due to the virus.

The US currency remained in a positive position against a selection of its major competitors.

However, the dollar index, which is a device used by traders to monitor how the greenback is doing in direct comparison to several major currencies from across the globe, was actually fairly stagnant.

This was in large part down to the way that the yen behaved, as it smoothed down the dollar’s overall gains when calculated in the index.

Elsewhere around the world, currencies that see some rises during times of risk-on mood suffered badly.

The Australian dollar, for example, was down.

The same applied to the British pound, which had enjoyed a positive performance in recent days due to announcements from the government of a financial support scheme for employers.

The Norwegian krone, meanwhile, was also down over the course of the day.

In China, the yuan was down by a fifth of a percentage point at one stage, and was seen at 7.0098.

This was a far cry from 6.9808, which it saw on Thursday, and which is its best performance for almost four months.

The coronavirus pandemic appears to be continuing to dominate the forex markets, and there appears to be no signs of it ceasing to influence the world economy.

The forex markets have continued to display serious fluctuations since the virus began, and shifts between risk-on and risk-off attitudes have been observed.

Governments are still taking radical steps in an attempt to contain the virus and any new outbreaks of it – moves that are causing serious economic effects.

On Friday, for example, the Australian government revealed that it would introduce a weekly cap on the number of people who can enter the country.

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