The Japanese yen continues to gain strength over the escalating US-China trade war, trading close to eight-month highs against the dollar. At the time of writing, USD/JPY is trading at around 105.988, over worries that the prolonged trade tensions could cause more central banks to turn dovish and ease monetary policies.
The safe haven appeal of JPY continues to reign in markets, setting the stage for a second consecutive weekly gain against the US dollar. Investors continue to worry that the trade war between US and China could weaken the global economy.
However, there may be some weakness in the Japanese yen coming over fundamentals. According to a recent Reuters poll, core machinery orders are expected to decline for a second consecutive month in June. Economists are expecting a 1.3% decline in this figure, which is a key indicator of capital expenditure, as the trade war continues to affect the Japanese manufacturing sector.