JPY crosses

Dangerous escalation in tension between China/Japan

This is one story which might have an increasing impact on the financial markets. Tensions in the East-China Sea escalated overnight with Chinese warships reportedly pointing missile radars at Japanese military targets, and Japanese officials describing the situation as dangerous.

What to trade? Be short risk trades but preferably not buying Yen is logical in my opinion. So selling AUD/USD or AUD/CHF would be the logical trade if these geo-political rumblings get louder.

  1. Hi Sean,

    It’s probably a distant worry now, but IF the FX market starts to price this in, isn’t this bearish for USDCHF because of potential US involvement?

  2. Traditionally both the USD and the CHF are the big winners in times of geo-political tensions. Any US involvement would not have an impact as the USD becomes more sought after as means of transaction when trouble is looming. The CHF gains more as a safe-haven play. Therefore neutral USD/CHF imho but both ccys would gain across board IF as you say it becomes a bigger issue

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