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USD/JPY: Yen firms up as risk aversion flows grow on rate fears and rising US-China tensions – MarketPulse


  • US weekly jobless claims drop to lowest levels since February
  • Apple shares slide as China’s crackdown on iPhone use grows; Losing over $200 billion in market value
  • BOJ’s Nakagawa reiterates stance that BOJ and gov’t are monitoring FX rates and impact on economy

The US dollar index hit its highest level since March as risk aversion runs wild on higher interest rate fears and as global growth concerns spread to the US.  The dollar is poised to have an eight straight week of gains, but that is somewhat capped against the Japanese yen.  US stocks are falling on concerns that the Fed might not be done tightening and over uncertainty over how far China’s iPhone ban will extend into other parts of American technology.  Also weighing on sentiment is the global growth story that remains uninspiring following slightly better-than-expected China trade data and as fears grow for German industrial output.  For the US economy, the labor market is not softening quickly enough and that makes the Fed stick to the hawkish script that they might not be done raising rates. 

The yen got a minor boost after BOJ Nakagawa stated that the central bank will closely coordinate with the government in monitoring foreign exchange rates and paying due attention to any impacts on the economy. Japanese officials will remain consistent with this messaging, but markets won’t react that much unless we significantly more yen weakness.


The Nasdaq is sinking as one bad Apple spoils a bunch of mega-cap tech stocks.  Apple’s growth story is heavily reliant on China and if the Beijing crackdown intensifies that could pose a big problem to the bunch of other mega-cap tech companies that rely on China.  The WSJ reported that China is banning iPhone use for government officials at work.  China is delivering some harsh restrictions on overseas technologies, and this could really hamper Apple’s revenue outlook as China is their largest foreign market.  The mega-cap tech trade appears ripe for pullback, but most investors will likely be eyeing the early AI winners and not so many companies that are still in the early stages of their investment.  Microsoft and Nvidia will likely outperform their peers. 

USD/JPY Daily Chart

Earlier verbal intervention might have helped stall the dollar’s rally against the yen, but this latest pressure on tech stocks is significantly weighing on sentiment, which could help keep the yen supported. Japan officials are getting unexpected support from a bad Apple outlook, which help support a dollar-yen dip back to the lows seen earlier in the month.  The dollar temporarily surged after jobless claims fell to the lowest levels since February, but some are expecting that to influenced by the impact of Hurricane Idalia.

The key levels for dollar-yen remain 145.80 and 148.00, with volatility expected to remain elevated given a breach of either the 145 or 150 levels.  If the broader dollar strengthening cycle remains that will eventually tip the scales of the massive divergence in central bank policy. One more Fed rate hike getting fully priced in might not be enough to get USD/JPY back to last October’s high, so you might start to see some bearish positioning.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA

With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.

Ed Moya

Ed Moya


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