Due to the bad loan issues of two American banks, global demand for safe-haven assets has surged.

On October 17, Friday, the Japanese yen continued to strengthen, causing the USD/JPY to fall below the 150 mark, sliding from an eight-month high due to the emergence of bad loans at two American banks, which boosted global demand for safe-haven assets. The yen outperformed most of its G10 peers on Friday, and by the time of writing, the USD/JPY had fallen over 0.5% to around 149.63, marking the lowest level since October 6. The Swiss franc also rose, while the US dollar and US Treasury yields both declined amid a sell-off in regional bank stocks. Strategist Mark Cranfield pointed out that forex traders reviewing 2023 would note that during the regional banking crisis at that time, the USD/JPY exchange rate fell by about 800 pips from high to low. If a similar situation occurs this time, it means that the currency pair could drop towards the 146 range low this month. The key driving factor is again the big dump in US Treasury yields, with the 2-year Treasury yield having fallen to levels not seen in three years. As traders price in the Fed's target interest rate reaching the 3% range, there remains ample room for downside adjustment.