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Japan and Asian Forex Market Continues to Tumble

Updated on
  • Difficult day across the board for JPY and Japanese Economy
  • American Markets also Continue to Feel the Pressure
  • Key US Numbers Release will Impact Further

The wait for more positive market news continues Friday as we round off the week with more of the same crushing losses that have become a huge feature of recent weeks. Asian markets are suffering again today, with those in Japan leading the line in terms of losses. Overall markets in Tokyo have fallen around 3% in the afternoons trading and these losses look set to mount up until the final bell this afternoon.

JPY Bearing the Brunt of Asian Fears

Traders had already started the move away from the Japanese Yen in recent weeks, its long-term safe haven status undermined by the current virus spread. This had pushed forex traders in particular toward the US Dollar, while gold has also noted sharp increases.

The JPY has remained quite steady through today’s losses. This however cannot be expected to last given the losses that the market in Tokyo has seen. Household spending numbers for January showed a 3.9% decline. This has followed on from a 4.8% decline in December of the same numbers and makes for poor readily as other spending numbers across sectors showed significant declines.

The Nikkei index drop of almost 3% has been led by a huge drop of almost 6% from Japanese titan Softbank and overall this has led to a reversal in the gains the JPY had managed to claw back earlier in the week. It is now trading at just below 106 to the US Dollar.

US Markets also Under Strain

Trading on Wall Street today also opened to some stark overnight losses. The Dow Jones Industrial Average was down close to 970 points, while the S&P and NASDAQ, both key indices for traders, also shouldered losses of more than 3%. The 10-year treasury yield is also at a rock-bottom, all-time low.

The only positive here for the USD forex market is the fact that other major currencies and economies around the world are also struggling in close to equal measure. This does not mean strength from the USD currency market, though it does mean that trader confidence in the Greenback as a safe bet is likely to continue. This too could change with the virus worsening in the US and the White House admitting today that they do not currently have enough testing kits to meet the anticipated demand as case numbers continue to rise.

Market Looks to Key Numbers Release

Traders will be looking for any sign of hope to end a tough week today as the US releases both non-farm payroll and wage growth numbers. These are likely to have a big impact on market sentiment going into the weekend. Analysts expect another month of strong growth with estimates projected to be around +175,000 and unemployment numbers expected to hold. This could well provide a much needed confidence boost to end the week.

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Anthony is a financial journalist and business advisor with several years’ experience writing for some of the most well-known sites in the Forex world. A keen trader turned industry writer, he is currently based in Shanghai with a finger on the pulse of Asia’s biggest markets.