Safe-haven currencies in market panic: Japanese Yen, Swiss Franc, and Gold

As global trade tensions continue to escalate, especially with April 2 approaching, market risk aversion has noticeably increased.

Deutsche Bank's latest currency flow data (CORAX) shows that inflows into safe-haven assets are at historical highs (the 5-year percentile ranking indicates that the flows into safe-haven currencies and gold are significantly above average).

In particular, hedge funds have increased their buying intensity for safe-haven currencies (the yen and the Swiss franc) over the past two weeks, while real money investors continue to purchase gold in large quantities, the euro maintains moderate buying, and the inflows into commodity currencies show a divergent trend.

Specifically, the status of the yen, Swiss franc, and gold as safe-haven assets is more prominent in the current environment and may continue to attract inflows; the euro may have some relative appeal compared to the dollar, especially in the context of global trade tensions.

Regarding commodity currencies, the flow of funds is complex and divergent, with emerging market currencies facing greater uncertainty, while investors still maintain high interest in individual currencies such as the South African rand and the Thai baht.

Yen and Swiss Franc in Demand, Risk Aversion Clearly Rising

The report data shows that hedge funds are recently increasing their allocation to traditional safe-haven assets, particularly the yen and the Swiss franc, mainly driven by ongoing tariff concerns.

Real money investors also maintain strong buying of gold , although the pace of buying has slightly slowed compared to two weeks ago, it remains an important direction for capital inflows.

Real money investors and discretionary trading hedge funds simultaneously maintain a moderate buying level for the euro, indicating that the euro's status as a non-dollar asset remains attractive in the current environment.

However, it is worth noting that discretionary trading hedge funds have reduced their buying intensity for the pound, reflecting increased concerns about the UK economic outlook.

Divergent Performance of Commodity Currencies

In terms of commodity-related currencies, discretionary trading hedge funds have maintained significant buying of the New Zealand dollar and moderately bought the Australian dollar and Canadian dollar. This indicates that despite trade tensions, investors remain relatively optimistic about the economic outlook of some commodity-exporting countries.

In contrast, systematic hedge funds have reduced their buying of the New Zealand dollar while increasing their selling of the Australian dollar and Canadian dollar. This divergence reflects differing views among various types of investors regarding commodity currencies, with systematic traders possibly more concerned about the potential negative impact of global trade frictions on commodity-exporting countries

In terms of Nordic currencies, hedge funds maintained strong buying of the Swedish Krona, but exhibited a starkly different behavior towards the Norwegian Krona: systematic hedge funds increased buying, while discretionary trading hedge funds increased selling.

Emerging Market Currency Flows Show Complex Patterns

In emerging market currencies, systematic hedge funds shifted to slight buying of the South African Rand, while discretionary trading hedge funds continued significant buying. Real money investors increased buying of the Israeli Shekel, while hedge funds turned to selling.

Among Asian currencies, overall investors maintained substantial buying of the Thai Baht and substantial selling of the Singapore Dollar.