The yen is proving its credentials as a.......>

JAPAN: The yen is proving its credentials as a safe-haven currency,

strengthening today following the US's renewed threat of tariffs on more Chinese

goods, and China's threat of countermeasures. USDJPY currently trades at its

daily low of 109.69, 0.76% lower on the day and outperforming the rest of the

world. 

- While historical correlations between US real yields and the yen suggest the

yen should be trading weaker than current levels, US real yields themselves are

beginning to decline which is yen positive. 

- AUDJPY is testing support at its May 30 low, having lost 3% over the past

week. CNHJPY is also looking weak, breaking below both its 100 and 200DMAs

today. The narrowing interest rate differentials between China and Japan,

together with China deteriorating external position relative to the Japan,

provide potential for a large move lower in CNHJPY should global trade tensions

not improve.