The Japanese yen fell against its major counterparts in the Asian session on Thursday as the United States and Iran moved away from an all-out conflict. The two sides dialled down their rhetoric following days of heightened tensions caused by the US assassination of a top Iranian general, Qasem Soleimani, last week.
US President Donald Trump said in his address to the nation that Iran "appears to be standing down" after it launched missile attacks on US targets in Iraq where there were no casualties. He also said he would impose new economic sanctions on Iran and that the Unites States is "ready to embrace peace with all who seek it."
The yen, seen as a haven in times of unrest, because of its deep liquidity and Japan's current account surplus, fell to a 10-day low of 109.32 against the greenback, off an early high of 109.01, amid risk appetite. The Japanese currency slipped to 1-week lows of 121.55 against the euro, 143.46 against the British pound and 112.24 against the Swiss franc, from its previous highs of 121.10, 142.78 and 111.97, respectively.
The lowering of tensions which allowed investors to breath a sigh of relief will now shift their attention to an upcoming U.S.-China trade deal.
"Assuming Iran-US tensions continue to simmer rather than boil, markets are likely to refocus on the global growth outlook and on trade, with the interim US-China trade deal expected to be signed on 15 January," National Australia Bank's Tapas Strickland told AFP.
Chinese Vice Premier Liu He will lead his country's trade delegation to the United States from January 13 to January 15 to sign the phase one trade deal, Gao Feng, spokesman at the commerce ministry said. United States President Donald Trump said in December that he would sign the phase one trade deal with China on January 15 at the White House.
Also in focus is the release Friday of US jobs data, which will provide the latest snapshot of the world's number one economy and the upcoming earnings season, which kicks off this month.