The Australian dollar rallied, and the safe-haven yen fell as there were reports that there was de-escalation in a trade war between the US and China. Reports suggested that almost all the issues that were in contention have been resolved. That gave a lot of confidence to investors and traders in Asia.
In the currency market:
The yen which is thought of as a safe bet reduces when the markets are not risky, and as most of the issues in the trade war is perceived to be resolved, the Japanese currency reached its lowest of 111.53 against the dollar on Mar 20 at 111.455 for a dollar.
Chief forex strategist Masafumi Yamamoto talking about Yen being a safe haven said “Major central banks are embracing dovish rhetoric which supports ‘risk on’ in the markets. The yen stands to remain on the defensive under such conditions.”
The dollar index saw a fall of 0.1% and was at 97.236 after reaching its three-week high of 95.517 against the other six major currencies. The dollar reached its high as the long-term bond yields were at its lowest since Dec 2017.
The Pound remained unchanged and was at $1.3136. There was a slight increase of 0.25% as PM Theresa May said that she would seek another delay in Brexit deal to work out the matter with the opposition leader for another deal.
The yields for the German bonds fell below zero as investors are looking for safe havens after the non-resolution of Brexit. With that, the Euro increased to $1.1224 a rise of 0.15%.
Aussie dollar rises:
Aussie share market suffered losses as the RBA did not change the interest rates and going by the statements, there may be some monetary policies which will help the economy going forward. But the losses suffered yesterday was recovered as the currency ended at the US $ 0.7097, showing a gain of .35%. The Aussie dollar also saw a rise of 0.55% against 79.17 yen.
The dollar reacts to the Chinese market as the leading trading partner for Australia is China, and since the fortunes of the Chinese economy is taking a turn for the better, the dollar is on the rise and can quickly fall if China markets react badly.
As per expectations, the negotiations between China and the US has ended well, the response of the major currencies has been docile. Now it needs to be seen what amendments will be made that can help the economy.