The Japanese yen rallied today, rising for the second trading session against the US dollar, even though economic data from China resulted in risk appetite among Forex market participants that should have weakened the currency.
The positive economic report from China made traders more willing to risk and boosted riskier currencies. Yet the Japanese currency gained too. It looks a bit strange, considering that the yen is considered to be a safe investment option, meaning that the currency tends to perform poorly when the Forex market in a risk-positive mode.
So why the yen defied its usual behavior? One of the possible reasons may be that the huge decline of the currency (which lost 4.4 percent of its value against the US dollar in September) made it oversold, resulting in a small bounce. Another possible explanation of the rally is that China is the top trading partner for Japan, making good news about Chinese growth positive for the Japanese economy.
USD/JPY fell from 108.84 to 108.52 as of 7:36 GMT today. EUR/JPY declined from 139.84 to 139.58, and GBP/JPY went down from 178.06 to 177.41.
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