Japanese Yen Losing Its “Safe Haven” Appeal?

World equities:  starting with another 3.4% drop in the US’s DJIA (^DJI), the UK’s FTSE (^FTSE) closing at 11/2008 lows, the German DAX (^GDAXI) at 2004 lows, the French CAC (^FCHI) at 2003 levels, and Japan’s Nikkei (^N225) just closing down nearly 1.5%…

Following recent currency trends, looking at those frankly scary numbers above, a Forex trader’s brain immediately triggers “buy USD, buy JPY”…But not so fast.  With the current troubled state of Japan’s economy being aided by new Japanese government reports finding that the deep recession for the second largest world economy is worsening, the JPY is starting to soften up across the board.  The risk averse sell of the USDJPY, EURJPY, GBPJPY, etc. was NOT the play today during NY trading as equities took a hit.

With the deepening of economic troubles, Japan’s Prime Minister Aso posted record low approval ratings today and reports claim that he may be planning some changes in his cabinet.

So the question now:  What do we make of the recent moves by the JPY?  Will the JPY still come out as the safe haven?

The USDJPY is currently trading at a 12-week low

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