US Dollar Japanese Yen Exchange Rate Continues Fall Throughout Wednesday
The US Dollar Japanese Yen exchange rate continued to slump throughout Wednesday as markets predictably headed away from the US Dollar amid Presidential election jitters towards the ‘safe haven’ Japanese Yen.
It is unlikely markets will be too heavily affected by Wednesday evening’s Federal Reserve policy decision. However, if the bank indicates that there may be no US interest rate hike until 2017 or later, the US Dollar will definitely plunge further.
(Published 12:23 GMT 02/11/2016)
The US Dollar Japanese Yen exchange rate had given up all of last week’s advances by Wednesday morning as markets rushed to the ‘safe haven’ JPY amid a surge in uncertainty towards the US Presidential election.
More jitters are likely in the week ahead, meaning USDJPY could continue to fall further away from recent levels of 103.45, to levels as low as 102 in the next few days. The pair may even slump below the key level of 100 depending on next week’s election result.
US Dollar (USD) Weakens as Markets Panic on Increasingly Possible Trump Presidency
The US Dollar has enjoyed strong favour from currency investors in recent weeks due to hopes of a ‘status quo’ Presidency from Democrat Hillary Clinton and higher bets of a December Federal Reserve interest rate hike.
However, that bullishness ended this week as markets began to lose their appetite for the ‘Greenback’ with just under a week to go until US citizens take to the polls, with Trump closing the polling gap with his opponent.
The latest US data impressed, with the ISM October Manufacturing index improving to 51.9. Despite improving Fed rate hike bets slightly, these figures did not give the US Dollar significant support as markets focused increasingly exclusively on the election.
Japanese Yen (JPY) Bolstered as Investors Seek Safe Havens
With the US Dollar becoming increasingly volatile and global markets becoming increasingly uncertain about the future of US Presidency, traders flocked towards other ‘safe haven’ investments like the Japanese Yen this week.
Japanese data did little to change this influential market movement, even though Nikkei’s Japan PMI slipped from 51.7 to 51.4.
The Bank of Japan’s (BoJ) latest policy meeting also did little to prevent markets from buying up the Yen, despite lower inflation forecasts and a frozen stance on policies like quantitative easing from BoJ Governor Haruhiko Kuroda.
US Dollar Japanese Yen Exchange Rate Forecast to hit New 2016 Lows if Trump Wins Presidency
Market uncertainty is once again to blame for this week’s currency movements, with it likely uncertainty will only worsen further in the coming weeks and months if Republican candidate Donald Trump wins the Presidency in next week’s election.
Trump, with his lack of political experience and unorthodox economic and foreign policies has become the source of considerable uncertainty and volatility in global markets. Clinton, on the other hand, is similar enough in policy to US President Barack Obama that she is perceived as a ‘status quo’ candidate.
The US Dollar Japanese Yen exchange rate’s movement in the coming months hinges on this election. The stability of a Clinton win would increase bets of a December Federal Reserve rate hike, which would in turn improve the US Dollar’s value considerably.
The uncertainty of a Trump win, on the other hand, could cause so much market volatility that the Fed has to delay any potential December action. These levels of uncertainty would of course send demand for ‘safe havens’ like the Japanese Yen soaring.
If USD/JPY falls below the key level of 100.00 in the coming months, this could open other cans of worms such as the potential of the Japanese government interfering with the forex market to keep the value of the Yen down.
As such, it’s easy to see how vital the US Presidential election will be on both the short and long-term USD/JPY exchange rate forecasts.
At the time of writing, the US Dollar Japanese Yen exchange rate trended in the region of 103.45, while the Japanese Yen US Dollar exchange rate traded at around 0.0097.
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