USD/JPY Fundamental Daily Forecast – Safe-Haven Money Moving into Japanese Yen

The Dollar/Yen is trading lower early Monday with the Japanese Yen attracting buyers due to its safe-haven status as investors interpreted Friday’s abrupt ending to the trade talks between the United States and Canada as a bad omen for even tougher negotiations between the U.S. and China.

At 0830 GMT, the USD/JPY is trading 111.020, down 0.090 or -0.08%.

Traders will be watching the negotiations between the U.S. and China closely because they may serve as proof that U.S.-China talks are not going to be easy. This is causing uncertainty and this typically sends investors into the safety of the Japanese Yen.

President Trump may have raised the issue on Saturday when he said there was no need to keep Canada in the North American Free Trade Agreement and warned Congress not to meddle with the trade talks or he would terminate the trilateral trade pact altogether.

The Dollar/Yen was pressured late last week after Bloomberg News reported that Trump has told his aides he is ready to impose tariffs of an additional $200 billion worth of imports from China as soon as a public comment period on the plan ends this Thursday.

Trump also caused market jitters last week when he threatened to withdraw from the Worth Trade Organization if “they don’t shape up” and after he said he wasn’t pleased with the offer from the European Union.

Forecast

Today is a U.S. bank holiday so we aren’t expecting much movement in the USD/JPY. With the major banks and institutions on the sidelines today, the Dollar/Yen could be moved easily by a big order since there may be only a few legitimate stoppers trading.

In economic news, Japanese Capital Spending rose 12.8%. This was nearly double the 6.6% forecast and nearly four times the previous report. Final Manufacturing PMI came in as expected at 52.5.

Additionally, Bank of Japan Governor Haruhiko Kuroda on Monday warned that the growing presence of high-frequency trading (HFT) could exasperate price moves and hurt financial market stability.

“Assessments of HFT have not been entirely positive,” Kuroda told a seminar.

“If the risks of high-speed and frequency trading amplifying price changes…are left unattended, they might impair financial market stability” and weaken the price discovery functions of the futures markets, he said.