Have you ever heard about Safe Havens? Safe Havens is an investment that is expected to maintain or increase in value when the market is volatile. A safe haven is sought by investors to limit the risk of loss in the event of a market downturn.
You can say that this investment has a low risk than other examples. That is why; a lot of traders really want to know about it. Furthermore, they also do this kind of investment to prevent any risks and losses in the future.
However, what appears to be a safe investment in one down market can be a catastrophic investment the next. It means that you still need to be careful when choosing this investment. Lately, the good trade relation between US-China has an impact on it.
The Dollar Condition during Pandemic
The coronavirus pandemic really has a massive effect on various aspects of life. Those are ranging from education, business, social life, and more. The traders also feel the impact of this pandemic. They cannot get a high profit as usual.
The dollar fell again on the back of being hit by reports of US consumer confidence data that fell to its lowest level in six years. It is because of the concern of many people about job losses caused by the viral pandemic.
Currently, traders are focused on waiting for Fed Powell's speech on Thursday evening and other important data releases. Gold prices still tend to be low until now. It can be seen from the price movement which is still below the $ 1940.00 level.
The good news from US-China trade relations dismissed the interest of Safe Havens Gold and the Japanese Yen. These are increasing the Carry Trade action from the Japanese Yen to several currencies. The examples are like the US Dollar, Pound Sterling, and Euro.
Latest Price Report
For today, the price of gold is predicted to consolidate like yesterday. However, this price will still be within the wider area between the 1905.00-1940.00 levels. On the other hand, the USD/JPY currency is predicted to rise from the level of 106.65 to the level of 106.95.
Meanwhile, the GBP/JPY currency is predicted to continue its advance to the level of 140.5. It comes with the possibility of a downward correction to the level of 139.45. What about the EUR/JPY? This currency is predicted to continue its advance.
It is still in the levels of 126.30-126.70 with a possible correction down to the 125.60 level. On the other side, the AUD/USD itself is predicted to rise to the level of 0.7225. These prices are for sure can be changed because of several conditions.
Strengthening Safe Havens Due to Abe's Statement
Japanese Prime Minister Shinzo Abe plans to resign today because of his worsening illness. He is worried that he will not be able to lead the country well. It is especially in this time of the pandemic which desperately needs government attention.
The speculation of Abe's resignation has occurred in recent weeks and is getting stronger at this time. As a result of this, the Japanese Nikkei index, which was once in the green zone, fell 2.63%. It illustrates the panic that has driven the investors.
They are afraid to out of risky assets from stocks to safe Japanese Yen Havens. Shares on the Nikkei exchange (risky assets) have a negative correlation with the Japanese Yen (safe Havens). It is because the buying and selling of Japanese shares use the local currency.
The Japanese Yen exchange rate sharply strengthened against the USD this Friday. It was by 0.43% after the news of Abe's resignation. It happened even though previously it had weakened. The USD/JPY currency is predicted fall due to Abe's withdrawal which strengthens the Yen Safe Havens.
