The Yen is strong. Overview for 19.08.2020

USDJPY is correcting on Wednesday after a significant decline earlier; however, the Yen remains very strong. 

The Japanese Yen is correcting against the USD in the middle of the week but it doesn’t significantly change its position. The current quote for the instrument is 105.58.

The “lion's share” of investors’ demand for “safe haven” assets is now falling on gold and the Yen. At the same time, demand for the USD, which is an ultimate “safe haven” asset is significantly lower because the situation in the US economy and constant conflicts with China have a negative influence on the “greenback’s” reputation. As a result, the Yen is now the leader among protective assets, which leads to its strengthening and it’s not the best gift the Japanese economy could receive. As a matter of fact, the Yen is rising not because the Japanese economy is strong and stable but due to the weakness of the USD. 

The statistics published by Japan in the morning showed that the Machinery Orders lost 7.6% m/m in June after adding 1.7% m/m in May and against the expected reading of +2.1% m/m. On YoY, the indicator showed -22.5% against market expectations of -17.6%.

The real sector of the economy in Japan is experiencing troubles and it’s not even the peak.