Yen More Attractive on Renewed Risk Aversion

The yen ended the week with a very positive performance versus most of the main traded currencies as a new wave of risk aversion brought traders to purchase assets in the Asian country, since the yen is well-known for being the safest refuge currency for times of uncertainty in trading markets.

The yen climbed significantly this week versus the U.S. dollar after a White House statement proposing new regulations for banking institutions in the country fueled speculations that investments will decrease in the U.S., forcing investors to abandon dollar-priced assets to search for safety in Japan. The euro remained unattractive allowing the yen to post a weekly advance as Greece’s financial crisis continue to raise concerns among traders regarding the Eurozone economic future. The pound also dropped versus the yen despite inflation positive figures, as retail sales unexpectedly fell in the end of the week.

Risk aversion is coming from different directions, China and U.S. statements regarding financial restrictions had a huge impact in market sentiments, that’s behind yen’s rally this week. If new tightening policies become a rule globally, the yen will certainly rally further.

USD/JPY closed the week at 89.80 from as high as 91.86 on Thursday. EUR/JPY closed at 126.91 from as high as 129.48 on Thursday.

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