Yen Exchange Rate May Be in Trouble in 2020 | Wibest

The Japanese yen exchange rate is in deep waters this 2020 as the US and China settle the trade agreement. It’s as if the trade war saga is a Marvel franchise wherein it has phases and climaxes.

US and Asian stocks are rallying thanks to trade war hopes, but that’s not the case for safe-haven assets. Gold, the Swiss franc, and the Japanese yen are expected to react to the progress.

Yesterday, major currencies were able to acquire post-holiday gains against the yen because of Donald Trump’s comments earlier this week.

The greenback to yen exchange rate rallied 0.22% or 0.25 points in Thursday’s trading sessions. The pair was supported by the improving sentiment around the trade agreement.

However, the pair’s gains remain limited due to the lack of full or official details about the signing ceremony that Trump promised. Traders are still cautious as there is still a possibility that both parties can’t deliver the deal in the first week of January.

Bright Prospects

A phase one agreement would have great impacts in the markets which have taken great hits from it this 2019. If both economic powerhouses actually sign the agreement in early January, it would be a great start for 2020.

However, the safe-haven assets would lose their shine, meaning the Japanese yen exchange rate could continue to plummet.

An economist said that the phase-one deal would reduce risks in the global economy, paving way for soft but stabilizing growth. And as the two feuding countries try to negotiate, banks and agencies are slightly raising their forecasts for 2020.

A Chinese bank settled its global growth forecast to 3.3%, inching higher than the 3.1% estimated for this year. However, some are still skeptical whether the deal is just a strategy of the incumbent US President.

It’s no shocking news that Trump is running for re-election, and his ever-changing sentiment over the trade war draws doubt. Critics are wondering whether the president would actually push a full deal if he wins.