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In case you were too busy looking at the new trailer for the Love Actually sequel (or Googling what the heck Love Actually is), then you should know that the yen has been raking in pips against its counterparts for the past couple of days.

What’s up with that?!

Let’s take a look at four possible factors that are pushing the low-yielding currency higher:

Trumphoria fading?

As Forex Ninja detailed in his latest update, the markets’ positive reaction to Trump’s promises are starting to show chinks in the form of sharp losses for the major U.S. equities indices. See, market players are starting to doubt if the Donald would actually work on his tax and infrastructure plans or if he was just blowing hot air during the campaign.

U.S. Equity Indices 1-hour Chart
U.S. Equity Indices 1-hour Chart

Remember that much of the optimism from the previous weeks stemmed from Trump’s promises. The prospect of delays or not getting the job done at all could undermine Uncle Sam’s recovery and even change analysts’ (including the Fed’s) economic outlook for the world’s largest economy.

All eyes are on Congress as members vote on repealing and replacing Obamacare. Specifically, economic junkies are looking at the vote as a sort of litmus test for Trump’s ability to work with the lawmakers.

If the Republicans’ bill doesn’t get enough votes or if leaders delay the vote some more, then we might see risk aversion push the “safe haven” yen higher across the board.

Fed and BOJ updates

Last week the Fed’s much-awaited policy statement dragged on the widely-traded USD/JPY as market players were disappointed that Fed members weren’t as hawkish as their pre-FOMC statement speeches suggested.

The combination of disappointment and profit-taking also took its toll on the U.S. 10-year bond yields, which tends to have a direct correlation with how USD/JPY and a lot of other yen crosses also trade.

Thing is, the strong U.S. bond yields already put upward pressure on the yen before they fell. You see, the BOJ has promised to buy enough bonds to keep 10-year Japanese government bond yields “around zero percent” to encourage investors to put their moolah on riskier, higher-yielding assets.

But with U.S. bond yields hitting notable highs before the Fed published its March policies, the directly-correlated JGB yields also saw upward pressure, which then inspired rumors that the BOJ would have to adjust and relax its 0% mandate. That would mean fewer JGB purchases for the BOJ and fewer yen in the open markets!

In its latest meeting minutes, BOJ members nixed the idea and maintained that economic risks “remain tilted to the downside.” However, one member kept hope alive by suggesting that the JGB yield curve “should be a little steeper.”

Shinzo Abe’s real estate scandal

Word around the hood is that Japan’s Prime Minister Shinzo Abe has given preferential treatment to Moritomo Gakuen – an organization specializing in education – by selling a plot of land in Osaka for a fraction of its price. In fact, school principal Yasunori Kagoike has stated that he has personally received an envelope containing 1 million yen ($9,000) from Abe’s wife on behalf of the Prime Minister.

Abe has denied the accusations, saying that “I did not make a donation. Nor did I make a donation through my wife Akie or my office” and has pledged to resign if he was found to have any link to the land sale.

In the meantime, support for Abe’s Cabinet and his ability to carry out his plans to revive the economy has taken enough hits to spook investors. But while concerns like these would normally drag other currencies lower, the yen’s “safe haven” status made it even stronger amidst worries for world’s third-largest economy.

Overall risk aversion

Concerns over Trump fulfilling his campaign promises might have taken center stage for the past couple of days, but it also didn’t help that there were other news reports that weighed on risk sentiment.

The attack in London, for one, has weighed on the British pound while the slide in oil and other commodity prices also sent investors to the low-yielding yen.

Last but not least is the lack of a market-moving catalyst or central bank statement that would buck the yen’s uptrend.

Yen's 1-hour Forex Charts
Yen’s 1-hour Forex Charts

That’s it for our list today! While the odds are in favor of the yen these days, keep in mind that the factors discussed depend a lot on sentiment and speculations.

In other words, it could change at the drop of a hat (okay, maybe not that quickly) over the next trading sessions. Make sure you keep your eyes peeled for any updates that could reverse the yen’s uptrend!