The yen surged on Thursday as investors scrambled into the perceived safety of the Japanese currency after a shock revenue warning from Apple (NASDAQ:AAPL) exacerbated concerns about a Chinese and broader global economic slowdown.
The yen at one point was 4.4% stronger versus the dollar after a flurry of automated orders triggered a 'flash crash' in thin Asian markets. It later stabilised but the yen remains on course for its biggest one-day rise in 20 months.
Such big moves in foreign exchange markets reflect deep and growing angst about the global economy - the yen has traditionally been the go-to currency in times of stress because traders believe the legions of Japanese investors holding money overseas will rush back into Japan when markets are in flux.
The yen, up 5.3% in five weeks, is the best performing major currency since early December, when worries about the direction of the global economy intensified.
Weakness in the dollar also reflects concerns about the U.S. economy and a drastic shift in investor expecations for interest rate rises, with many now calling the end of the Federal Reserve's rate-hiking cycle.
The USD/JPY saw a massive decline in Asia hitting a 104.10 low, ahead of the latest very strong recovery. We remain bearish on USD/JPY, while the 109.16 Fibonacci level remains intact. 109.16 Fibo is a 50% retrace of the 114.21 to 104.10. MyFXspot.com trade idea is a sell order at 108.50.
Economic research and trading ideas by MyFXspot.com