Safe Haven Yen Rises in Forex Markets Over Trade War Fears

Camila Martinez

forex graphThe Japanese yen returned to its position as a so-called “safe haven” yesterday after growing concerns emerged about the risk of a trade war between the US and China.

Despite signs in recent weeks suggesting that there was a compromise on the cards, it has appeared in recent days as though the two countries are not going to reach a breakthrough.

It has even been suggested that new tariffs may be on the way. US President Donald Trump used the social networking site Twitter during the weekend to say that tariff rates on $200 billion worth of Chinese items would go up to 25% rather than the current 10%.

The US dollar went down by a tenth of a percentage point compared to the Japanese yen as a result of the developments and reached 110.13 in the USD/JPY pair.

The overall US dollar index, which tracks the greenback’s performance in comparison with six other currencies, went down a little to 97.560.

However, the Chinese Vice Premier will visit Washington DC this week – suggesting that there is still hope for those looking to avert a trade war.

Now that the midpoint of the foreign exchange trading week has arrived, there’s still a lot for traders to monitor for.

Today (Wednesday), there will be a number of key central bank speeches. The European Central Bank’s President Mario Draghi will speak at 11.30am GMT, while the Federal Reserve’s Lael Brainard is expected to speak at 12.30pm GMT.

There’ll be a housing price balance release for April out of the UK at 11.01pm GMT. This is expected to show a change from -24% to -22%.

Looking ahead to Thursday, there’s expected to be a consumer price index out of China at 1.30am GMT. This is expected to show a year on year change from 2.5% to 2.3%.

The producer price index, which is out at the same time, is forecast to show a change from 0.4% to 0.6%.

Japanese consumer confidence index information for April is expected at 5am GMT. This is predicted to show a change from 40.5 to 40.3.

US producer price index information for April will be out at 12.30pm GMT. This is expected to reveal a slight year on year change from 2.2% to 2.3%.

The overall US trade balance for March is due at 12.30pm GMT.

American continuing jobless claims for the dates around April 26th will be out at 12.30pm GMT. These were last recorded at 1,671,000.

Initial jobless claims for the dates around May 3rd will be out at the same time. These were last recorded at 230,000.

There’ll be a speech from the Federal Reserve’s Raphael W. Bostic at 1.45pm GMT, and a further US central banker speech is expected at 5.15pm GMT, when Charles L. Evans, President and Chief Executive Officer of the Federal Reserve Bank of Chicago and a member of the Federal Open Market Committee, speaks.

The day will be rounded off by a summary of opinions report from the Bank of Japan, which is due to 11.50pm GMT.

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Camila Martinez
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