Rabobank argue that safe haven flows are, at the margin, shifting towards the USD at the expense for JPY and CHF

To summarise:

  • JPY and CHF have traditionally been the FX market's preferred safe haven currencies
  • USD to an extent, but its had a traditionally more volatile relationship with the status of safe haven
  • Since the start of 2017 … the fact that JPY strength against the USD has not been more pronounced may seem out of kilter with geopolitical events in this period … . tensions between US and North Korea, between the US & Iran, concerns about China's growing influence, military strength

For the currencies:

  • "We would argue that much of the safe haven flow that may have been previously destined to the JPY has been diverted to the USD on the back of the improved yield associated with the USD. The recovery in US growth in recent years and the Fed's ability to start normalising its policy was thus freeing the BoJ from unwanted safe haven flows and currency strength. While we expect that this effect will continue to offer USD/JPY support in the months ahead, it is still likely that the JPY will see bout of buying pressure on worrying news events and in particular geopolitical concerns."
  • "Given growing recognition that that the current dispute between the US and China could be more cold war than trade war and on the back of growth tensions regarding Iran we see risk for USD/JPY to push towards the 108.00 area in the coming months. That said, we expect the USD to outperform a wide basket of other currencies."