Forex Power Rankings: Yen Flight to Quality

Japanese yen has not been viewed as a flight-to-quality asset in a long time, but the emergence of fear in the US and Europe has caused many to buy yen over the last week translating to a +2.9% move in JPY against its major currency pair partners. The recent shakeup has not been able to lift Australian or Canadian dollars, however, as those two currencies continue to underperform.

Performance of individual currencies USD, EUR, JPY, GBP, CHF, CAD, and AUD in all their pair combinations against each other is measured and weighted equally when deriving the week-over-week net change found below; currencies are then ranked on their overall percentage net change.

Trend followers might trade in the direction of recent strength or weakness, while contrarians could trade against the trend, For example, trend followers tend to buy the strongest currency, and contrarians tend to sell it.

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1. Japanese Yen - JPY (+2.9%)

Last week's ranking: #7 (-1.0%)

The escalating fear in the stock market, especially in bank stocks, translated to a general flight to quality that lifted Japanese yen against every major currency. JPY rallied particularly hard against the euro as well as Australian and Canadian dollars.

2. Swiss Franc - CHF (+1.0%)

Last week's ranking: #5 (-0.4%)

Swiss franc was the strongest of the major European currencies, though competition from British pounds was stiff. At the moment, CHF is holding up thanks to recent outperformance relative to AUD and CAD, though sentiment might be starting to turn.

3. British Pound - GBP (+0.9%)

Last week's ranking: #4 (+0.1%)

Though it might not be boasting the largest number of the group, GBP appreciated consistently against major pairs like the US dollar and euro. With its relatively high interest rates and seemingly stable economy, Great Britain's pound has been a bright spot recently for non-USD currencies.

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4. Euro - EUR (-0.5%)

Last week's ranking: #2 (+0.7%)

Just when you might have thought euro could go on a run - up +0.7% at the last Power Ranking - the spread of bank stock fear hit the Eurozone. EUR fell particularly hard against the Japanese yen, even amid a 50-basis point (0.5%) hike from the European Central Bank (ECB).

5. US Dollar - USD (-0.8%)

Last week's ranking: #1 (+0.8%)

For the time being, the fear coming in from the US stock market has caused just a blip for US rates and dollars - USD is unchanged from last the Power Ranking to now. However, if the fear continues, this could be seen as a turning point for a dollar market that's been strong for well over a year.

6. Australian Dollar - AUD (-1.6%)

Last week's ranking: #6 (-0.5%)

Australian dollars continue to see weakness as they near year-to-date lows against USD, JPY, and GBP. A lower-than-expected interest rate environment in Australia and a falling industrial stock sector have not built confidence in AUD over recent weeks.

7. Canadian Dollar - CAD (-1.8%)

Last week's ranking: #3 (+0.3%)

It may not have made headlines or shown up on your social media feed, but Canadian dollars have depreciated considerably in recent trading against every major currency. The high for the last two years in USD/CAD is just above 1.38, and the market isn't currently far off.