Safe-Haven Currency
Safe-haven currencies are the ones investors buy when risk turns off: the dollar, yen, franc and gold-linked flows.
Safe-haven currencies are the ones bought when risk turns off: the US dollar, Japanese yen and Swiss franc. They tend to strengthen during crises and stock selloffs.
A safe-haven currency is one investors buy when they want protection: during crises, stock selloffs and geopolitical shocks. The traditional safe havens are the US dollar, Japanese yen and Swiss franc, with gold playing the same role outside currencies. Safe-haven flows are a risk-on/risk-off signal in forex, and they often move against commodity and high-yield currencies in the same sessions.
How It Works
- Funded by investors rotating out of risk assets
- USD, JPY and CHF are the classic trio
- Moves are sharpest in sudden risk-off events
Trading Tips
Safe-haven strength is usually the other side of commodity currency weakness
JPY safe-haven flows can be counterintuitive when Japan's own policy is loose
Watch risk indices and equities as the leading signal for haven flows
Related Terms
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