TechFlow, Oct. 17 — According to Jinshi Data, the yen continued strengthening on Friday, driving the dollar-yen below the 150 level and down from its highest point in eight months, as non-performing loans at two U.S. banks boosted global demand for safe-haven assets.
The yen outperformed most G10 peers on Friday. At the time of writing, USD/JPY had fallen over 0.5% to around 149.63, hitting its lowest level since October 6. The Swiss franc also rose, while both the dollar and U.S. Treasury yields declined amid a sell-off in regional bank stocks.
Strategist Mark Cranfield noted that forex traders reviewing 2023 would recall that during the previous regional banking crisis, USD/JPY dropped approximately 800 points from peak to trough. If a similar move occurs this time, it implies the pair could fall toward the 146 range low this month. Once again, the key driver is the sharp drop in U.S. Treasury yields, with 2-year yields now back to levels seen three years ago. As traders price in Fed target rates approaching the 3% zone, there remains ample room for further downside overshoot.
