Early yesterday, we saw a mad dash to safety as the yen rallied strongly during the Asian and European session. The USDJPY pair opened at 96.15 and dropped as low as 94.67, before finally closing at 95.34. It appears that risk aversion continued to be the dominant market theme, as recent news has caused traders to finally see that global economic recovery will slow.
Japan’s
Leading Indicators index was released yesterday, and had a reading of 77% for the month of May. This was in line with expectations and was an increase from previous month’s score of 76.2%. The report indicated that while the recession is easing in all 9 regions of Japan, conditions still remain severe. Economists believe that there will still be some instability as companies cut costs by lowering production and payrolls.
Later today, the Core Machinery Orders m/m is due at 11:50 pm GMT. Take note that machinery orders play a significant role in the Japanese economy. If orders rise, it signals that manufacturing activity will pick up. The forecast is that orders rose 2.3% last May. Also due later at 11:50 pm are the Bank Lending y/y and
Current Account reports.