Japanese Yen v. U.S. dollar in Forex Trading

September 16, 2008 by Trader Rich

Which currency is least risky on the FX market?Right now, the Japanese yen and the U.S. dollar appear to be battling each other over which currency is the least risky right now. The Forex Blog points out that risk aversion is playing a role in both currencies’ recent strength on the FX market:

The Yen has benefited from the same trend towards risk aversion that has underlied the Dollar’s strength.

With the carry trade unwinding, due to risk aversion, and many traders turning to the U.S. dollar for the same reason, it is no surprise that the yen has held its value rather well in forex trading — despite the U.S. dollar rally.

All that remains to be seen is which currency serves as the preferred safe haven currency going forward on the FX market.