CHF and JPY don't always rally when stocks fall

[Shadow Trader]

Calling the franc and the yen "safe havens" makes traders lazy. Plenty of risk-off days they don't act the part.

Yen strength often comes from unwinding carry trades, when investors who borrowed yen to buy higher-yielders buy it back. That's a funding story, not safety. If the sell-off is caused by American yields spiking, USDJPY can rise instead, since yields drive that pair.

The franc has its own trouble. The SNB has leaned against strength at times and Swiss rates are low, so the reaction depends on context. In some stress episodes the dollar is the actual winner and both CHF and JPY lag.

So the rule "stocks down, buy yen" fails often enough to cost money. Better to ask which kind of risk-off it is: growth scare, yield shock or credit stress. Each rewards a different currency.

Has the rule failed you recently, and which currency actually caught the bid on the last big sell-off you traded?