Corona Virus
Stay Safe, FollowGuidance
Fetching Location Data…
James Hyerczyk

The Asia Pacific currencies posted mixed results last week with the Japanese Yen supported by renewed safe-haven buying and the Australian and New Zealand Dollars led lower by lingering domestic issues. The moves were a little deceiving, however. The Japanese Yen spent most of the week lower, but turned around on Friday when safe-haven demand increased in reaction to a steep sell-off in U.S. equity markets. A plunge in U.S. Treasury yields helped boost the Aussie and Kiwi on Friday, reducing some of their earlier losses in the week.

Looking ahead, escalating tensions between the United States and China will likely be supportive for the Japanese Yen, while keeping a lid on the Australian and New Zealand Dollars.

U.S. Dollar Impact

The U.S. Dollar weakened against the Japanese Yen and Australian and New Zealand Dollars after President Donald Trump ordered U.S. companies to start looking for an alternative to China. The move took place in response to Beijing imposing more tariffs on American goods, further escalating tensions between the two economic powerhouses in a prolonged trade dispute. Also contributing to the greenback’s weakness was a dovish speech by Federal Reserve Chairman Jerome Powell.

President Trump triggered a steep break in the U.S. Dollar when he tweeted, “Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.”

Although the biggest reaction against the Yen, Aussie and Kiwi was to Trump’s tweet, remarks from Federal Reserve Chairman Jerome Powell did put some pressure on the dollar due to their dovish nature.

Powell did not announce a major stimulus measure to ease concerns over a slowdown in global economic growth, but did prepare investors for further interest rate cuts. Powell acknowledged the U.S. economy was in a “favorable place” and the Fed would “act as appropriate” to keep the current economic expansion on track.


Japanese Yen

Last week’s rally by the Japanese Yen was fueled by safe-haven buying. The catalysts were a steep plunge in U.S. equity markets and a drop in U.S. Treasury yields. For the first four days of the week, the currency was pressured by limited economic data, a more positive outlook for the U.S. economy and the possibility of hawkish comments from Fed Chair Powell.

The USD/JPY finished the week at 105.420, down 0.903 or -0.85%.

Domestically, Japan’s Trade Balance was -0.13 Trillion versus -0.15 Trillion. Flash Manufacturing PMI remained in contraction territory at 49.5, below the 49.8 forecast. All Industries Activity was -0.8% worse than the -0.7% estimate. The previous month was revised higher to 0.5%.

Australian Dollar

The Aussie received a boost early in the week when the Reserve Bank of Australia (RBA) Monetary Policy Minutes showed policymakers were willing to “wait and see” how the economy does after a pair of rate cuts in June and July. This helped reduce the chances of a September rate cut.

The AUD/USD settled at .6756, down 0.0027 or -0.40%.

New Zealand Dollar

The New Zealand Dollar drifted lower all week until Friday. The selling pressure was enough to take out the August 7 bottom that was reached after the Reserve Bank of New Zealand (RBNZ) shocked the markets with an unexpected 50-basis point rate cut.

The kiwi jumped from a three-and-a-half-year low after RBNZ Governor Adrian Orr said he was “pleased” with where interest rates were, dampening expectations of another rate cut in September.

The NZD/USD settled at .6396, down 0.0029 or -0.45%.

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

Trade With A Regulated Broker

  • Your capital is at risk
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.