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PIG TODAY-Yen rises, dollar weakens as Trump travel ban, unrest rattles investors

The yen advanced against its peers in holiday thinned trade on Monday, strengthening as much as 0.7% against the dollar, with risk sentiment worsening after President Donald Trump’s travel ban order and ratcheting up of his protectionist stance.

Sentiment has been bruised as thousands gathered in New York and Washington on Sunday afternoon to protest President Trump’s executive order temporarily banning some foreign nationals and Syrian refugees from traveling to the U.S.

The U.S. dollar USDJPY, -0.23%   tumbled to ¥114.27 during lunch break in Tokyo before slightly recovering to ¥114.47. That compared with ¥115.06 late Friday in New York. The euro EURJPY, -0.19%  also declined to ¥122.85 midday from ¥123.01 late Friday. The Japanese currency was also stronger against other rivals such as the Australian dollar and the U.K. pound.

Weakness in Tokyo stocks also prompted investors to buy the Japanese currency against the dollar, which was already under pressure over the weekend after lackluster U.S. GDP data for the final quarter of 2016. The benchmark Nikkei Stock Average NIK, -0.51%  was down 0.6% midday. In addition, increasing concerns about Trump’s tough approach toward trade and other issues also weighed on the dollar’s upside and prompted buying of the perceived safety of the yen.

Investors generally regard the Japanese currency as a safe haven asset that retains its value during periods of geopolitical or financial instability. They buy the Japanese currency when those episodes of uncertainty intensify.

Markets had been betting that Trump’s economic plans would stoke higher inflation in the U.S., causing the Federal Reserve to raise rates quicker than previously expected.

But “investors are now increasingly mindful of the bad aspects [of Trump],” says Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow.

Japanese Prime Minister Shinzo Abe said Saturday he and Trump had agreed to meet in Washington on Feb. 10. “I hope to have a frank, meaningful exchange of opinions with him on a broad range of issues from economies to security, “ Abe said.

Trump pulled the U.S. out of the 12-nation Trans-Pacific Partnership, a broad trade deal that Mr. Abe had advertised as a pillar of Japan’s growth strategies. The U.S. president has also accused Japan’s car makers of engaging in unfair trade practices.

“Investors are unlikely to see tailwinds pushing up the dollar against the yen given the [U.S.-Japan] trade issues,” said Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan in a note, adding that the summit has potential to be the turning point for a stronger yen.

Trading remained thin on a region-wide basis with many financial markets were closed due to the Lunar New Year holidays in Asia, thus exaggerating the currency moves.

In other currency trading, the euro EURUSD, +0.0187%  was at $1.0723, compared with $1.0699 late Friday.

The WSJ Dollar Index BUXX, -0.04%  , a measure of the U.S. dollar against a basket of major currencies, was down 0.22% at 91.22.

Source: marketwatch.com

The yen advanced against its peers in holiday thinned trade on Monday, strengthening as much as 0.7% against the dollar, with risk sentiment worsening after President Donald Trump’s travel ban order and ratcheting up of his protectionist stance.

Sentiment has been bruised as thousands gathered in New York and Washington on Sunday afternoon to protest President Trump’s executive order temporarily banning some foreign nationals and Syrian refugees from traveling to the U.S.

The U.S. dollar USDJPY, -0.23%   tumbled to ¥114.27 during lunch break in Tokyo before slightly recovering to ¥114.47. That compared with ¥115.06 late Friday in New York. The euro EURJPY, -0.19%  also declined to ¥122.85 midday from ¥123.01 late Friday. The Japanese currency was also stronger against other rivals such as the Australian dollar and the U.K. pound.

Weakness in Tokyo stocks also prompted investors to buy the Japanese currency against the dollar, which was already under pressure over the weekend after lackluster U.S. GDP data for the final quarter of 2016. The benchmark Nikkei Stock Average NIK, -0.51%  was down 0.6% midday. In addition, increasing concerns about Trump’s tough approach toward trade and other issues also weighed on the dollar’s upside and prompted buying of the perceived safety of the yen.

Investors generally regard the Japanese currency as a safe haven asset that retains its value during periods of geopolitical or financial instability. They buy the Japanese currency when those episodes of uncertainty intensify.

Markets had been betting that Trump’s economic plans would stoke higher inflation in the U.S., causing the Federal Reserve to raise rates quicker than previously expected.

But “investors are now increasingly mindful of the bad aspects [of Trump],” says Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow.

Japanese Prime Minister Shinzo Abe said Saturday he and Trump had agreed to meet in Washington on Feb. 10. “I hope to have a frank, meaningful exchange of opinions with him on a broad range of issues from economies to security, “ Abe said.

Trump pulled the U.S. out of the 12-nation Trans-Pacific Partnership, a broad trade deal that Mr. Abe had advertised as a pillar of Japan’s growth strategies. The U.S. president has also accused Japan’s car makers of engaging in unfair trade practices.

“Investors are unlikely to see tailwinds pushing up the dollar against the yen given the [U.S.-Japan] trade issues,” said Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan in a note, adding that the summit has potential to be the turning point for a stronger yen.

Trading remained thin on a region-wide basis with many financial markets were closed due to the Lunar New Year holidays in Asia, thus exaggerating the currency moves.

In other currency trading, the euro EURUSD, +0.0187%  was at $1.0723, compared with $1.0699 late Friday.

The WSJ Dollar Index BUXX, -0.04%  , a measure of the U.S. dollar against a basket of major currencies, was down 0.22% at 91.22.

Source: marketwatch.com

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