New traders learning point: Risk and the Yen
The Japanese Yen is a risk haven currency
The Japanese Yen is a safe haven currency which investors rotate into during times of uncertainty. The Yen is most probably the largest risk sentiment mover and is the go to currency of choice for risk on and risk off moves.
So, the next time there is a big shift in risk sentiment, remember that you are likely to see strong movements in the JPY.
Falling equity markets=Risk off= YEN strength
Rising equity markets=Risk on= YEN weakness
Look at the reaction to the latest Trump news on an interim China deal to delay tariffs to see how the JPY reacts to positive risk sentiment. It serves as a useful lesson.
Trump tweets positive US-China trade news, the S&P500 ticks up and the Yen ticks down (AUDJPY strength, see below). Risk sentiment is now remaining supported with 10 year yields up 2.72% S&P500 up 0.59% and the Dow up 0.52% too.