Daily Economic Commentary: Japan

[PipDiddy]

The yen sumo-wrestled and knocked out its counterparts once again in Friday's trading. USD/JPY dropped to its one-week low of 76.65 before ending the day at 76.68, 77 pips below its opening price. Against the euro, the yen managed to snatch a 12-pip win as EUR/JPY closed the week at 101.36.

Although we had a few economic reports on tap from Japan on Friday, a few market junkies argue that it was the broad dollar weakness which triggered a strong wave of yen-buying and allowed the currency to rally against most of its counterparts.

But nonetheless, let me give you a recap of the reports released from Japan.

Tokyo’s core CPI for January posted a bigger decline of 0.4% than the 0.3% contraction that the market was expecting. On the other hand, the national core CPI just came in as expected at -0.1%.
Consumer spending was up in December at 2.5% erasing the 2.2% drop we saw in November and topped the 2.3% forecast.

Whether it was market sentiment, economic data, or a combination of both, be careful not to go loco buying the yen. Word around the hood is that the sharp drop in USD/JPY last Friday may be enough reason for the BOJ to intervene. Yikes!

[PipDiddy]

And the Bank of Japan's nightmares continue! The yen continued to strengthen across the boards yesterday, leading USD/JPY to fall another 32 pips and end the day at a new three-month low at 76.21. Will this finally get the central bank to step in?

Yesterday's risk-off sentiment worked in total favor of the yen. As a matter of fact, it was the day's strongest currency! Yeah, that's great news for yen bulls, but it's awful news for the BOJ, which has been struggling to keep the yen from rising. You gotta wonder how long the central bank can sit on the sidelines and watch this beast rally up the charts!

On another note, the reports that Japan rolled out late last night were pretty mixed. On one hand, we had household spending (0.5% vs -0.1%) and preliminary industrial production (4.0% vs 2.8%) come in better than expected. But on the downside, Japan's unemployment rate ticked up from 4.5% to 4.6%!

If you plan on trading the yen today, be sure to tap into the newswires and listen carefully for any comments from BOJ officials. With USD/JPY breaking below a key support level, they might just get back to jawboning!

[PipDiddy]

There's just no stopping the yen! Despite warnings of intervention, the yen continued to post gains against its counterparts. USD/JPY ended yesterday's trading 12 pips below its opening price at 76.22. Meanwhile, against the euro, the yen was able to snatch a 55-pip win, closing the day at 99.69.

Japanese Finance Minister Azumi threatened that the government will take action against the currency's extreme moves as USD/JPY neared its all-time low. However, a few market junkies say that until we see positive developments both in the U.S. economy and the EU debt crisis, investors would likely continue to flock to the yen's safety.

Keep in mind that the BOJ doesn't want the yen to reach its highs as it would make Japan's exports relatively more expensive than those of its counterparts.

So with that said, be sure you keep an ear out for talks of intervention. Who knows, the BOJ might just meddle with the forex market and pull the trigger on intervention again. Be careful!

[PipDiddy]

And the yen’s winning streak comes to an end! No thanks to the market’s appetite for risk, the yen was sent lower against most major currencies yesterday. Versus the euro, for instance, the yen posted a 56-pip loss.

The market’s good mood was mainly the result of good news from euro zone. For one, rumors went around that the Greek swap deal might finally push through. There was also the report that there was a very healthy demand for Germany and Portugal’s bonds.

There were no major economic events that happened in Japan though, and none again are scheduled today. This means that the yen will most likely be driven by market sentiment and news coming out of major economies, especially those from the U.S. and euro zone.

[PipDiddy]

Looks like the BOJ peeps aren’t as excited to intervene as many market geeks are expecting! We didn’t hear much jawboning from the BOJ yesterday, even when USD/JPY stayed near its record lows at 76.21, while EUR/JPY closed at 100.18.

No thanks to profit-taking ahead of the NFP and a bit of risk aversion in markets, the yen continued to stay strong against its counterparts. What’s interesting about it is that the BOJ doesn’t seem to want to take action against it as much as many forex geeks do.

Apparently, the central bank is hoping that the yen’s recent moves are merely speculation, and that the yen’s value would return to more favorable levels soon. Finance Minister Jun Azumi said that he’s currently watching the markets and will take steps if necessary.

In the meantime, we have economic releases to focus on. There are no reports scheduled for release in Japan today, but the big NFP report is coming up in the U.S. The report usually inspires crazy volatility in the charts, so make sure you have your trade plans ready!

[PipDiddy]

The yen suffered across the board yesterday as traders unwound their carry traders on better-than-expected U.S. data. USD/JPY and EUR/JPY both rose on Friday, respectively gaining 33 pips and 47 pips.

Japan's economic calendar is very light this week as no major events are scheduled to happen. There are a few reports coming out like the Currency Account Balance, the Household Confidence Survey, and the Preliminary Machine Tool Orders but none of those reports tend to have a strong impact on the market. This means you should pay attention the events in other major economies such as the U.S. and euro zone.

[PipDiddy]

Looks like there won’t be a currency intervention today! Thanks to a recovery in risk appetite and a lack of economic reports from Japan, the yen was able to steady its price action against its major counterparts. EUR/JPY capped the day 8 pips higher than its open price, while USD/JPY closed as a doji on the daily chart.

Still, a lack of volatility on the yen’s charts doesn’t mean that you should sit back and relax! Today at 5:00 am GMT we’ll get hold of Japan’s leading indicators report, followed by a bank lending and current account report at 11:50 pm GMT.

Oh, and you might also want to check out major economic report from other economies! We never know when risk aversion might hit the markets!

[PipDiddy]

Guess who's been playing ninja! A report released yesterday showed that the Japanese government has been stealthily intervening in the forex market these past few months to limit the yen's gains. Consequently, the news made the yen yesterday's biggest loser on the charts, giving up pips to all of its major counterparts.

USD/JPY ended the day's trading 19 pips higher at 76.78. Meanwhile, EUR/JPY closed 120 pips above its opening price at 101.76.

The Ministry of Finance published a report yesterday which showed that the government bought USD/JPY multiple times in the last quarter of 2011. For instance, it sold 8.07 trillion JPY in exchange for dollars on October 31 and from November 1 to 4, it sold another 1.02 trillion JPY.

Although the government's efforts proved to be futile as the yen quickly recovered its losses after the interventions, it was enough to spook investors that Japanese officials will not just let the yen strengthen.

A few market junkies are still probably wary of buying the currency following the news and the better-than-expected current account report from Japan for December might not be enough to boost the yen in today's trading. It came in at 750 billion JPY and topped the 630 billion JPY forecast.

So if you're planning to trade the currency, it might be a better idea to gauge market sentiment in helping you anticipate which direction it's headed in today's trading.

[PipDiddy]

Thanks to mixed economic reports from Japan and the investors’ appetite for the Greenback, the yen slipped back against its counterparts. USD/JPY ended up rising by 23 pips to 77.02, while EUR/JPY also went up by 34 pips to 102.10.

Yesterday we saw Japan release its Economy Watchers’ Sentiment report, which showed that optimism on consumer spending dropped to a reading of 44.1 in January when analysts were expecting a 47.1 figure. Not only that, report released a couple of dumb bell reps ago also revealed that Japan’s core machinery orders dropped by whopping 7.1% in December after rising by as much as 14.8% in November. Yikes!

Later at 5:00 am GMT we’ll get hold of the country’s household confidence report, which is expected to slip by a bit against its previous reading. Then, at 6:00 am GMT, Japan will release its preliminary machine tool orders data.

Wanna stick around to trade these reports? Just make sure you have a tight trading plan to go with it!

[PipDiddy]

To the delight of the BOJ, the yen's slide continued yesterday as risk appetite carried yen pairs higher. While USD/JPY rallied 68 pips to 77.69, EUR/JPY surged 110 pips before it stopped at 103.21. Let's see if yen bears will end the week with a bang!

Looks like spirits are up in Japan! Household confidence turned out better than expected last month, as the index rose from 38.9 to 40.0 versus the consensus forecast of 38.6. According to Japanese officials, consumer sentiment is showing signs of picking up, though people are still concerned about the European debt crisis' potential impact on Japan's recovery.

No major reports on tap today, so I suppose we'll have to keep tabs on risk sentiment. Remember, risk appetite makes yen bears right! Good luck, fellas!