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Yen Spikes On Reports NSA McMaster Fired, Watch USD/JPY Range

Yen Spikes On Reports NSA McMaster Fired, Watch USD/JPY Range

David Cottle, Analyst


Talking Points:

  • The Japanese Yen got a sharp lift against the US Dollar Friday
  • US media including the Washington Post said that White House National Security Adviser HR Mc Master had been fired.
  • Risk aversion took a dip at this latest example of Administration instability

Find out how to avoid the most common mistakes traders make when dealing with major currencies like the Japanese Yen with the DailyFX Trading Guide

The Japanese Yen gained sharply against the Australian Dollar Friday on rising risk aversion following reports that US President Donald Trump had fired National Security Adviser Harold McMaster.

Reports of the firing were carried by the Washington Post and CNBC.

This looks like yet another example of instability at the top and comes after the resignation of economic adviser Gary Cohn earlier this month. He disagreed with the policy of increasing tariffs on steel and aluminum imports.

Given that tensions are apparently mounting with Russia and uncertainty over nuclear talks with North Korea it’s not surprising that markets should take a bit of fright at any sign of a similar national security split, and so they seem to have done. The Japanese Yen usually catches a haven bid in such circumstances and did so once more in this case.

Friday had been a sedate session devoid of eye-catching scheduled economic releases. However various news reports through the Asian morning added to the gloom.

Before the McMaster story broke there had also been reports that one of North Korea’s nuclear research reactors was under test. These probably didn’t help sentiment and neither did Japanese media suggesting that Prime Minister Shinzo Abe knew about a controversial land deal involving a company linked with his wife and the sale of State-owned ground.

On its daily chart, USD/JPY remains above the key downtrend channel in place from this year’s highs. A lower close Friday could see it back uncomfortably close to that level, but the broad range trade which has market out the action for the past couple of weeks looks set to endure.

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--- Written by David Cottle, DailyFX Research

Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.