USD/JPY Fundamental Daily Forecast – Should Tumble Further if WHO Declares Coronavirus Global Health Emergency

The World Health Organization (WHO) postponed a decision Wednesday over whether to declare the disease a global emergency. However, the WHO is expected to make the announcement today. This news should dictate the next move in the Dollar/Yen.
James Hyerczyk

The Dollar/Yen weakened on Thursday as investors grew more anxious about the spread of a virus in China. Fear and uncertainty over whether the virus is a local problem or a global emergency is encouraging investors to trim positions in risky assets and more their capital into the safe-have U.S. Treasury and the Japanese Yen.

At 11:34 GMT, the USD/JPY is trading 109.600, down 0.248 or -0.22%.

According to Reuters, death from the flu-like coronavirus stand at 17. Almost 600 people are infected and China has locked down Wuhan, a city of 11 million people, where the outbreak was believed to have originated at an animal market.

The moves up in the safe-have Japanese Yen and down in the Chinese Yuan were measured, suggesting investors were not yet panicking about the virus.

Hao Zhou, an economist at Commerzbank, said the worry was the virus would hurt China’s domestic demand.

“To cope with this risk, monetary policy could illustrate further easing bias. For the FX market, risk-off mode is likely to dominate for the time being,” he said.

Japan Reports Goods Trade Deficit for 2nd Straight Year in 2019

Japan logged a goods trade deficit in 2019, marking the second consecutive year a shortfall has been booked, the government said in a report on Thursday.

According to the Finance Ministry, the nation’s trade deficit in the recording period stood at 1.64 trillion yen (14.96 billion U.S. Dollars) with exports down 5.6 percent to 76.93 trillion yen (702.06 billion U.S. Dollars) compared to a 5 percent drop in imports to 78.57 trillion yen (717.10 billion U.S. Dollars).

On a regional basis, Japan booked a deficit with China, its largest trading partner, of 3.76 trillion yen (34.31 billion U.S. Dollars) in the recording period, with the amount growing for the first time in four years.

The ministry here said that demand for Japanese automobile components and semiconductor-linked equipment from China had declined in the recording period.

In its preliminary report, the ministry also said that with the United States, Japan booked a surplus of 6.63 trillion yen (60.50 billion U.S. Dollars), expanding from a year earlier, owing to solid demand for pharmaceutical products and circuit chip-making equipment.

As for Europe, a decline in demand for pharmaceutical products and vessels led to a deficit of 756.37 billion yen (6.90 billion U.S. Dollars) in the recording period.

For December alone, Japan’s goods trade deficit stood at 152.52 billion yen (1.39 billion U.S. Dollars), with exports dropping for the 13th straight month, down 6.3 percent, to stand at 6.58 trillion yen (60.04 billion U.S. Dollars).

Imports in the recording month, meanwhile, stood at 6.73 trillion yen (61.41 billion U.S. dollars), dropping 4.9 percent and marking the eighth successive month of decline, the data showed.

Daily Forecast

Investor sentiment has taken a hit this week, driving market participants out of higher-yielding assets and into the safe-haven Japanese Yen, as the mysterious coronavirus that has infected hundreds in China spreads.

The World Health Organization (WHO) postponed a decision Wednesday over whether to declare the disease a global emergency. However, the WHO is expected to make the announcement today. This news should dictate the next move in the Dollar/Yen.

Look for the USD/JPY to break further if the WHO declares a global emergency. If the WHO says it’s a regional matter then we could see a short-covering rally that drives the Dollar/Yen higher.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.