AUD - Top 4 safe-haven currencies to buy as the VIX surges
Global volatility has risen well in the past few months. As a result, the CBOE volatility index has jumped to the highest level since January because of the ongoing crisis in Europe. Here are the top safe haven currencies that investors are buying.
US dollar
The US dollar is the world’s reserve currency although some analysts are questioning the role it will play in the future. Therefore, in times of crisis, investors tend to rush to its safety. For example, the US dollar index has jumped to the highest level in months as the safe-haven demand continues.
At the same time, there are worries that the Federal Reserve will embrace a more hawkish stance in the coming months. This is after the US published strong employment numbers on Friday. The data revealed that the country added over 600k jobs in February while the unemployment rate crashed to about 3.8%.
The US will publish the latest inflation data this week and analysts are expecting another big number. Therefore, with prices rising, there is a likelihood that the Fed will embrace a more hawkish tone.
Swiss franc
The Swiss franc has been in a strong bullish trend against key currencies this year. The EUR/CHF pair dropped to the lowest level since 2015. The same downward trend has happened in other pairs like GBP/CHF and AUD/CHF.
Historically, the Swiss franc has been a good safe haven currency in the market. Investors love it because of the strength of Swiss banks and the fact that Switzerland has maintained neutrality in key issues. It broke the neutrality stance this year when it decided to sanction Russia for its invasion of Ukraine.
Japanese yen
Japan is the third-biggest economy in the world after the US and China. It is also one of the biggest global exporters, which makes the demand for the Japanese yen to be significantly strong.
Historically, investors also consider Japanese yen to be a safe-haven currency because of the strong investments it holds internationally. This explains why currency pairs like the EUR/JPY, GBP/JPY, and AUD/JPY have been in a strong bearish trend in the past few months.
Australian dollar
The Australian dollar can also be viewed as a defensive safe haven currency because of the role commodities play in its economy. As the Ukraine crisis has escalated, the prices of key commodities like copper, iron ore, gold, and natural gas have all risen. This will benefit the Australian dollar.
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