Yen posted a strong 2018 versus the US dollar relative to other currencies with the safe haven reason being the number one factor. Yen outperformed Sterling and the Euro as Brexit and the Italian budget problem became headwinds for the these currencies. One analyst is calling for USDJPY to trade to 107.00 in 2019. The US China trade war and plunging oil prices pressured the commodity-related peers such as the Canadian dollar.
The number of new shorts in the US dollar have increased in the past weeks at the US rate hike cycle is clearly shifting. The lack of risk factors for a wide range of currencies could make the Japanese yen a favorite in 2019, so the outlook for and the possibility of a safe haven could put the yen at the 109.00 to 107.00 range as the yen could slowly strengthen. Of course with some investors looking to diversify their investments, the yen will likely start to become favorite in the coming months.
Finally, the Japanese yen and its share of total reserves has now reached 5 percent since the third quarter of last year, putting it at the highest level in 16 years. The key flow questions will be the number of life cos and pensions buying overseas assets, or even selling these assets in the coming two months. This overseas flow will have impact on the yen level in most of 2019.