USD JPY Exchange Rate Tumbles as Markets Brace for Comey Testimony

June 7, 2017 - Written by James Fuller

STORY LINK USD JPY Exchange Rate Tumbles as Markets Brace for Comey Testimony

The US Dollar Japanese Yen (USD JPY) exchange rate trended lower on Wednesday as investors become increasingly cautious ahead of former FBI Director, James Comey's testimony in front of Congress on Thursday.

Mr Comey, who was fired by President Trump at the start of May, is expected to testify on allegations that Trump attempted to pressure him into halting an investigation into former national security adviser, Michael T. Flynn’s ties with the Russian state as part of the ongoing investigation into attempts to influence the US Presidential election.

Markets fear Trump’s presidency could be further damaged by any revelations in tomorrow’s testimony before a Senate panel and lead to further setbacks for his legislative agenda.

Investors are still awaiting a full outline of how Trump’s administration plans to implement his ambitious stimulus package and long awaited tax reforms, with markets fearing that his financial policies will be overshadowed once again if he is forced to react to yet another scandal.

Meanwhile the Japanese Yen’s status as a safe haven currency has caused it to strengthen today as traders flock to invest in less risk adverse markets such as the Yen and Gold.

Thursday is set to be a very busy day for currency traders, with the UK General Election, Comey Testimony and latest European Central Bank monetary policy meeting all taking place at the same time.

ING currency strategist Viraj Patel said;

‘Tomorrow’s what is being dubbed as ‘Triple Threat Thursday’... an event-filled day that could send global markets on a bumpy ride.’

With most of these events weighing on their respective currencies it has caused the stability of the Yen to become very attractive in the eyes of investors who seek to ride out the storm of uncertainty in relatively calmer waters.

The Japanese Yen is likely to strengthen further tomorrow with the final release of Japan’s first quarter GDP figures, with the data expected to confirm that Japan’s economy grew at 0.6% at the start of the year, beating the 0.3% growth seen in the previous quarter.

Looking a little further ahead the USD JPY exchange rate is also likely to rally next Wednesday following the Federal Reserve latest monetary policy meeting in which the Fed is expected to vote to raise interest rates for the second time this year.

However the ‘Greenback’s advance may be slowed if the Fed also indicates that it is likely to take a more dovish approach to monetary policy for the remainder of the year, with many economists forecasting that the central bank will postpone a third rate hike this year following a string of lacklustre US data in recent months.

Current Interbank Exchange Rates

At the time of writing the USD JPY exchange rate was trending around 109.4570 and the JPY USD exchange rate was trending around 0.0091.

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TAGS: American Dollar Forecasts