Japanese yen rally eases as the global banking crisis ease

The USD/JPY sell-off eased on Thursday as the banking crisis took a breather after the Swiss National Bank (SNB) provided Credit Suisse with ample liquidity to implement a turnaround. The forex pair was trading at 133.0 on Thursday, a few points above the lowest point this week.

Bank crisis eases

The Japanese yen, which is often seen as a safe haven, has been in a strong bullish trend against the US dollar in the past few days amid rising risks in the market. These risks accelerated on Wednesday as Credit Suisse led to a major panic in the banking sector.

The banking crisis seems averted for now after the SNB provided the bank with access to $54 billion to run its turnaround. By having access to these funds, it means that the embattled bank will not need to raise cash through another dilutive equity fundraising in the next few months. Most analysts were expecting the bank to raise cash in the coming months. In a note, an analyst at Vanda Research said:

“The initial fallout has been contained by the SNB’s backstop overnight, but I think the cat’s out of the bag in terms of the lagged damaged that aggressive policy tightening can do to both the real economy and financial markets.”

Japan trade deficit narrows

The USD/JPY price also wavered after the latest Japanese trade numbers. According to the country’s statistics agency, exports rose by 6.5% in January, lower than the expected 7.1%. In the same period, imports rose by 8.3%. As a result, the country’s trade deficit narrowed to about 897 billion yen. 

Additional data showed that Japan’s machinery orders bounced back in January. Core orders, which are a major part of the economy, rose by 9.5% on a MoM basis and by 4.5% on an annual basis.

This trend could improve as Japan and South Korea mend their relationship. South Korea’s president traveled to Japan for the first time in years in a landmark visit.