Seeing almost a flat trading on Thursday, with investors still having to assess investor demand for risk amid concerns over U.S. and China trade relations, forecasts for a global economic slowdown and more worries regarding different subjects, volatility in the currency pair would surely come to a crawl.
Although, it has been a slight bias to the upside since January 3, which could be driven by more than 50% recovery in U.S. equity markets, after a steep drop since October.
When it comes to market trading and concerns about it, investors’ primary focus would be on Treasury yields and equities, as rising Treasury yields would surely make the U.S. Dollar a more attractive investment to the lower Japanese Government bond yields. Then, the USD and its carry trade would provide support to the stock market gains.
The money would flow into a safe-haven Treasurys if stocks break on a sharply way, pressuring on yields. After this, falling yields will make the dollar a less-desirable asset, while helping to increase demand for the Japanese Yen.
What traders will be paying attention to would be on the news from earlier in the week, and everything regarding global growth concerns, with U.S. and China trade relations being the ones with more weight put into.
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