Yen Rises as China-U.S. Tension Adds to Trump Political Angst

The yen strengthened as a report Chinese jets intercepted a U.S. Air Force plane added to global geopolitical tensions.

Japan’s currency headed for its best week in more than a month versus the dollar as the disarray engulfing President Donald Trump’s White House bolstered demand for safer assets. Leveraged accounts were already shorting the dollar against the yen following a separate CNN report that the U.S. Navy was moving a second aircraft carrier to the Korean peninsula, according to an Asia-based trader.

“The yen’s preeminent safe-haven attributes yet again pass the test of time,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “The lack of key economic events or data releases means that the market’s attention is inevitably more receptive to geopolitical and U.S. political news.”

Ichimoku analysis shows the yen’s gain versus the dollar this week has pushed the pair into the so-called cloud, indicating short-term direction is now unclear. Traders typically wait for a currency pair to emerge from the cloud as a signal about its future direction.

  • USD/JPY declines 0.3% to 111.19, extending this week’s drop to 1.9%, most since week ended April 14
    • CNN reported 2 Chinese fighter jets came within 150 feet of a U.S. Air Force plane while it was flying over Yellow Sea in international airspace Wednesday
    • Leveraged accounts were quick to hit bids on the electronic platform, while larger funds were waiting for clarification on the nature of engagement, Asia-based trader says
    • Short-term funds trying to initiate long positions near 110.80 after being stopped out Thursday in London, and Tokyo corporates have both layered dollar sell orders between 111.80 and 112.00, according to another trader
  • Swiss franc has gained 2.1% vs dollar this week, set for best week since February 2016
  • Bloomberg Dollar Spot Index has dropped 1.1% this week
    • Gauge has lost almost all its gains chalked up since Trump’s victory in November
  • NZD/USD weakens 0.2% to 0.6885 after data showed foreign visitor spending declined in year through March