The yen weakened significantly against the US dollar to close to the lowest level of 2019, triggered by an increase in interest earlier this week. The Yen was near the annual low against the US dollar in Asian trade triggered by growing interest in risk among market participants. The increase in Risk Appetite was due to the emergence of signs of improvement in China's economy US corporate earnings.
The Fundamental Data of China Has Been Released
Some releases of China's fundamental data in recent times exceeded expectations, so investors are optimistic that China's economy will rebound slightly in the first quarter of this year. In addition, last week's report on US corporate earnings attracted investors' interest in shifting from safe-haven currencies to risk assets, in search of higher returns.
Yen weakness is reflected in the movement of the USD / JPY pair which some time ago touched the 112.09 level or the highest range in 2019. It could even be said, this level was the highest since the end of December last year. When this news was written, the price had weakened slightly to 111.99. Weakening is also experienced by other safe-haven currencies, namely the Swiss Franc which weakened significantly versus the Euro currency. Pair EUR / CHF is currently at the level of 1.1339, trying to erase losses suffered throughout the past month.
Reducing Concerns about Other Risks
Positive market sentiment slightly dampened concerns about trade talks between the US and Japan. The reason, Uncle Sam's country reportedly plans to set various requirements in bilateral trade agreements with Japan. "We are seeing conditions currently experiencing what is called the classic Risk On," said Minori Uchida, head of currency analyst at MUFG Bank.
However, Uchida believes that the strengthening of the US dollar against the yen may be limited, given that most of the previous speculators have hoarded long positions against the US dollar; this makes the USD / JPY pair vulnerable to short-term correction due to profit-taking.
Yen Trapped At the Lowest Range In the Year
The Japanese yen fell close to its low in 2019 on Monday because the rally in global stock markets pushed down demand for currencies considered safe-haven. Currency market volatility has reduced significantly in recent weeks and the movement has been depressed again, despite signs that optimism over progress in US and Chinese trade negotiations and strong Chinese economic data is driving investors into risky currencies.
The yen fell to as high as 112.09 per US dollar in Asian trade, nearing its lowest level of 2019 at 112.135, before recovering slightly as European markets opened. At 15.01 WIB, the yen was observed to rise 0.09 percent or 0.1 points to 111.92 per US dollar.
Japanese Economy Slows, Yen Prospects Worse
"The yen exchange rate against the US dollar is testing the 112.00 level and we expect to break above that level this week in response to solid US data and stable risk sentiment," ING analysts said in a note Monday (4/15). 2019), as quoted by Reuters. A relatively optimistic assessment of the global economy from the meeting of the International Monetary Fund (IMF) at the end of last week has helped global investment sentiment. Adding to positive sentiment, US Treasury Secretary Steven Mnuchin said he hoped the US-China trade talks were approaching the final round.
Data from the Chinese economy also showed recovery. On Friday, China's exports rebounded sharply and new bank loans increased far more than forecast in March. Even though China's imports remained weak, overall data sparked hopes that the economy was bottom and ready to rebound.
