Daily Economic Commentary: Japan

[PipDiddy]

After storming up the charts to start the week, yen crosses pretty much stayed within range and consolidated yesterday. EUR/JPY closed 14 pips lower to end at 121.04 while GBP/JPY gained 25 pips to finish at 136.32.

With no news or earthquakes to rock the markets, it’s no surprise that yen trading was relatively quiet. That could all change over the next few days though, as the G7 are meeting yet again. Remember, when the G7 met a month ago right after Japan got hit with 9.0 earthquake and tsunami, the group agreed on a coordinated currency intervention to help stabilize the Japanese financial markets. Could we see a repeat performance to end the week?

In any case, be careful trading yen pairs. If you ain’t too sure what to do, might be best to chill out and watch on the sidelines for now!

[PipDiddy]

Thanks to risk aversion, the yen looked as hot as J. Lo in yesterday’s trading. It gained against almost all of its counterparts. USD/JPY closed 30 pips lower from its opening price at 83.50 while EUR/JPY reached a low of 119.26 before closing at 120.95.

Just like yesterday, our economic calendar is still blank for reports from Japan. So if you’re planning to trade any of the yen pairs, be sure so gauge market sentiment! If news of sovereign debt pop up in Europe and data from the U.S. come in worse than expected, the yen may continue its rally. Be on your toes.

[PipDiddy]

OM NOM NOM! Yen buyers got their grubs on last Friday as they gobbled up the Japanese currency. Backed by a bit of good data and risk aversion, the yen was able to mark big gains against some of its biggest rivals as USD/JPY fell 37 pips to 83.09 while GBP/JPY dropped 102 pips to 135.40.

It seems economic nerds were a bit too pessimistic the first time they estimated Japan’s February industrial production. The revised edition of the report showed a much healthier rise in output of 1.8%, as compared to the previous estimate of just 0.9%. The main driver of growth was, ironically enough, a high output of passenger cars! Hah! Gotta love those Hondas and Toyotas!

But keep in mind that these figures were prior to the devastating earthquake and tsunami, so it’s very difficult to say at this point if Japan can continue posting gains at this pace in the coming months.

If you’re interested in Japanese economic data, you don’t have to look past Tuesday to get your fill!

First up, we get a peek at Japan’s household spending at 5:00 am GMT. Forecasts say the index will likely drop slightly from 39.9 to 40.6 for the month of March.

Then at 11:50 pm GMT, we have the tertiary industry activity report and trade balance data.

For the tertiary industry activity report, a pessimistic 0.2% rise is expected for the month of February, down from the 2.1% growth seen in January. Likewise, trade balance data for March is also expected to worsen as Japan’s surplus is seen to shrink from 560 million JPY to just 330 million JPY.

Also, keep tabs on risk sentiment because it’s been turning the tides in favor of the yen lately! Good luck, kiddos!

[PipDiddy]

It’s a bird… It’s a plane… It’s the yen! The Asian currency skyrocketed on the charts yesterday as risk aversion came in full swing. It gained a whopping 209 pips against the euro when EUR/JPY closed at 117.70. Meanwhile, USD/JPY closed the day 44 pips lower at 82.70.

With only the third-tier household confidence report on tap from Japan today, I have a feeling the yen’s action on the charts will still be primarily dictated by market sentiment. So make sure you get a feel of the market’s mood before you start betting your pips!

At 5:00 am GMT, analysts are expecting to see the index reflect the negative effects of the earthquake and tsunami in the country. The forecast for March is down at 39.9 after the index came in at 40.6 in February.

[PipDiddy]

The yen turned out to be one of the major underperformers in yesterday’s trading session due to the market's increased appetite for risk. The yen lost the most versus the euro, as EUR/JPY ended the day almost 150 pips higher.

Nothing coming out of Japan’s economic calendar today, but we did see the country’s tertiary industrial activity report and trade balance earlier today.

The tertiary industrial activity reported a rise of 0.8%, much higher than the 0.2% initially predicted. Since the report measures the total value of services purchased by companies, the increased activity hints that the overall health of businesses has improved.

The trade balance, on the other hand, showed a 10 billion JPY surplus for March, lower than forecast (330 billion JPY) and the figure seen the month prior (480 billion JPY).

Whether yen selling will continue today or not will depend on market sentiment. If traders and investors persist with their optimistic stance towards global growth and the economy, we could see the yen experience more losses! Good luck trading today folks!

[PipDiddy]

The Japanese yen was bullied by its major counterparts yesterday so it took out its rage on the U.S. dollar. Because of that, USD/JPY ended the day 73 pips down from its intraday high of 83.11. I guess we all know which is the weaker safe-haven now, huh?

Economic data from Japan was mixed, as the tertiary industry activity index came in better than expected while the Japanese trade balance fell short of expectations. Although the services index posted a 0.8% increase for February, which was better than the projected 0.2% uptick, the January figure suffered a huge downward revision from 2.1% to -0.1%. Ouch!

Meanwhile, Japan's trade balance showed a 0.1 trillion JPY surplus, short of the projected 0.33 trillion JPY reading. This was also less than the previous month's balance, which was downwardly revised from 0.56 trillion JPY to 0.48 trillion JPY. Components of the report showed the large drop in exports was mostly to blame for these disappointing figures. Among the industries that chalked up the worst declines is the cars and auto parts manufacturing, which were severely damaged after the earthquakes.

Japan won't be releasing economic figures for the next couple of days, which means that risk sentiment could keep controlling the yen's movement. Stay on your toes, everyone!

[PipDiddy]

Much like everything else, trading the yen was a real bore last Friday. It had everyone yawning as USD/JPY only moved 10 pips up from its opening price of 81.82. Even EUR/JPY and GBP/JPY, pairs that tend to be very lively, were unusually tame. EUR/JPY moved just 6 pips up to 119.16 just as GBP/JPY rose 7 pips to 135.29.

Since many traders were away for Easter and economic releases were very light, the yen hardly moved last Friday.

The question now is, will we see the yen spring to life this week?

Market players will be flowing back in from the long weekend, and this could result in big moves. Couple that with the reports Japan will be publishing this week, and we could have a catalyst for explosiveness!

Today, we’ll start with light data. At 4:30 am GMT, the all industries activity report is slated to show a 0.4% uptick following the 2.9% rise in February.

Then tomorrow at 11:50 pm GMT, we’ll pick up with retail sales data, which is expected to show a 5.8% decline. Wednesday (11:30 pm GMT) follows up with Japanese CPI, which is forecasted to reveal a 0.2% rise in prices after the previous month displayed a 0.3% drop. Then on Thursday, the BOJ will be making its monetary policy statement and holding its press conference!

Phew! It seems like Japan plans to make up for last week’s lack of reports, eh? Make the best out of it, kiddos!

[PipDiddy]

After trading lower during the Asian session, the yen made a slow and steady comeback in the latter sessions. After testing psychological resistance at the 120.00 mark, EUR/JPY dropped all the way back down to end at 119.12, just a few pips off its opening price. USD/JPY traded in a similar fashion, topping out at 82.43 before finishing at 81.69, 13 pips lower for the day.

Part of the reason why the yen may have rallied slightly was probably due to overall dollar weakness. Remember, it’s important to keep an eye out on USD/JPY, as strong flows in that currency pair could drive other yen pairs.

Later at 11:50 pm GMT, retail sales figures will be released. Word is that sales have dropped 5.8% on yearly basis during March. This shouldn’t be too much of a surprise – after all, Japan had to deal with the aftermath of the earthquake and tsunami.

[PipDiddy]

The yen’s movement across the yesterday was as mixed as a bag of nuts! The currency was able to gain versus the pound and the dollar, but lose out against the euro and the Aussie.

It seems that traders are starting to get jittery about the upcoming FOMC statement. They don’t know whether to put their money in safe haven currencies such as the Greenback, or go for gold and risk it on higher-yielding currencies like the euro and the Aussie.

In other news, earlier today, Japan’s retail sales report that was initially predicted to show a 5.7% decline came in with an 8.5% decrease instead. The unexpected drop was due to the very weak consumer confidence following the devastating earthquake.

Later, we’ll be treated to a plethora of economic data, starting with Japan’s consumer price index (CPI) at 11:30 pm GMT. At the same time, the household spending report will also be released. Shortly after, at 11:50 pm GMT, the preliminary industrial production report will publish.

While these reports aren’t usually market moving, paying attention to them still helps. You never know which of them will serve as a catalyst for a new trend or breakout!

[PipDiddy]

Ooomph! With the way the yen was clobbered in the charts yesterday, it looks as if its major counterparts did The Powerbomb on it many times over! Disappointing economic reports from Japan and a not-so-surprising downgrade of its credit rating outlook plunged the yen across the board, with USD/JPY tipping an intraday high of 82.79. EUR/JPY also rose by a whopping 198 pips to 121.35, while GBP/JPY climbed by as much as 213 pips to 136.46. Yeouch!

Aside from the disappointing retail sales report that I mentioned yesterday, Japan’s manufacturing PMI and household spending numbers also took a few hits. Manufacturing PMI ended up with falling to an index figure of 45.7 from its 46.4 reading in March, while household spending showed an 8.5% drop in March after already slipping by 0.2% in February.

Good thing its CPI numbers still show promise, with the Tokyo core CPI inching up by 0.2% while the country’s CPI by less than its rate last March at 0.1%. Last on the deck was Japan’s unemployment rate holding steady at 4.6% in March while its industrial production numbers showed a record drop of 15.3%. Yikes!

Let’s see if the yen manages to gain back some of its losses today when the BOJ announced its monetary policy decisions. Many analysts expect clues on its press conference today at 12:00 am GMT, but keep your eyes glued to the tube for any surprises!