Daily Economic Commentary: Japan

[PipDiddy]

The BOJ must've felt extremely relieved after seeing the yen sell off yesterday. It lost massive pippage against its two biggest counterparts as USD/JPY rallied 52 pips to 79.26 and EUR/JPY rose 163 pips to 99.69. Will we see more of the same today?

If the markets keep this up, the BOJ won't even need to get involved! Remember, Japanese Finance Minister Jun Azumi spoke up a couple of days ago, saying that Japan is ready to intervene if necessary. And those weren't just empty threats, homies! As I mentioned yesterday, word on the street is that Japan has already approached the G7 to ask for backup!

So far, this seems to be fueling the strong yen sell-off that we've been seeing, and assuming we don't get any new major risk-altering developments, it may continue to do so.

Today, we have a couple of Japanese reports worth noting, but you'll have to stay up late ('til 11:50 pm GMT!) if you want to catch them. The current account is due and is expected to show a slimmer surplus (from 0.79 trillion JPY to 0.62 trillion JPY). Also, final GDP data will be available, and survey says we'll see an upward revision on growth from 1.0% to 1.1%.

Now, keep in mind that the markets' risk sentiment will probably remain the key driver for the yen today, but these reports may just get yen crosses goin' if they print big surprises!

[PipDiddy]

Thursday was a terrible day for the yen as it lost ground to most of its major counterparts. EUR/JPY ended the day 33 pips above its opening price. Meanwhile, USD/JPY traded higher and closed the day with a 34-pip gain.

The lack of high-caliber reports from Japan might've left the currency vulnerable to market sentiment. Unfortunately for the yen bulls, Fed Chairman Ben Bernanke surprised markets yesterday with his not-so-dovish remarks on the U.S. economy.

But perhaps today will be different for the yen. Earlier, an upward revision from 1.1% to 1.2% in Japan's Q1 2012 GDP was reported. Maybe the revision will be able to provide the currency with some support in today's trading and offset the disappointment posted by the current account report which printed at 290 billion JPY versus the 620 billion JPY consensus.

[PipDiddy]

Risk aversion reared its head again in the forex market last Friday, allowing the low-yielding yen to rally versus other major currencies. It was able to gain 80 pips over the euro and 84 pips over the pound.

There were two major reports released in Japan last Friday: the current account balance and the final version of the first quarter GDP report. The current account balance came in with a 290 billion JPY surplus, just half of the 620 billion JPY initially expected. Meanwhile, the final GDP figure showed that growth for the first quarter was actually 1.2%, and not 1.1%.

The only major market-moving event on tap for the yen this week is the Bank of Japan (BOJ)’s interest rate decision. It’s scheduled on Friday and the central bank is widely expected to keep rates unchanged below 0.10%.

[PipDiddy]

No wonder they call it the Land of the Rising Sun – that’s all the yen did yesterday! With risk aversion back in tow, the yen was the biggest winner in yesterday’s currency battles. EUR/JPY closed 145 pips lower to finish at 99.20, while GBP/JPY dropped 37 pips to end the day at 123.07.

Rising bond yields and skepticism surrounding the Spanish bailout caused people to unload their positions in riskier assets, which helped benefit the yen. With uncertainty surrounding Spain and the Greek parliament elections coming up later this week, there sure is a ton of potential for the yen to make a nice run up the charts.

In other news, tertiary industry activity dropped by 0.3% in April, down from the 0.4% increase we saw the month prior. This suggests that Japanese companies are spending less on outsourcing, which could indicate a slowdown in business activity.

Late tonight, core machinery orders will be coming in at 11:50 pm GMT. Word out of Tokyo is that machinery orders rose by 1.9% in the past month, which would be a nice improvement from the 2.8% decline we saw the month before.

[PipDiddy]

The low-yielding Japanese yen was unable to hold its ground yesterday as a slight case of risk appetite managed to make its way to the market. The yen was sold-off against other major currencies, giving up 20 pips to the euro and 74 pips to the pound.

Economic data from Japan was mixed. The tertiary industry activity fell 0.3% while the CGPI, or the Corporate Goods Price Index, came in worse than expected at 0.5%. Earlier today, however, the core machinery orders report smashed expectations and published a huge 5.7% gain. The forecast was only for a 2.0% gain.

No hard data headed our way today that could reverse the yen’s move yesterday. Still, it would be best to keep an eye out for market sentiment as it could shift any time!

[PipDiddy]

With no economic report from the Land of the Rising Sun, the yen traded on appetite for the low-yielding currency. Fortunately, some were in a buying mood. While GBP/JPY did fall to 123.19, EUR/JPY had also risen by 41 pips to 99.80. What’s in store for the yen today?

Not much, actually. Looks like all we have on tap is the revised industrial production data due at 4:30 am GMT and even that isn’t expected to rock the yen pairs.

Do keep a close eye on the euro zone and the U.S. though. If investors go back to worrying about Greece, Spain, Italy, and even Cyprus, or if the Fed honchos give more QE-friendly statements, then we might see increased demand for the low-yielding yen.

Stay sharp in your trades, homies!

[PipDiddy]

Consolidation was the name of the game for the Japanese yesterday as it moved sideways against most of its major counterparts. USD/JPY managed to stay above the 79.00 handle while GBP/JPY ranged around the 123.00 mark. Will the BOJ rate decision trigger a breakout today?

The lack of top-tier reports from Japan, combined with the summer's ranging market environment, allowed yen pairs to cruise along the charts yesterday. Aside from that, traders were probably hesitant to take any large positions ahead of today's BOJ rate decision.

Although the central bank is expected to keep rates on hold at <0.10% as usual, traders are wary of any comments regarding recent yen strength since the BOJ has been notorious for intervening in the currency markets. Make sure you keep your eyes and ears peeled for that as well because any hint of intervention could send those yen pairs zooming up the charts!

[PipDiddy]

Nothing to see here! Despite an interest rate decision by the BOJ, the yen traded in its usual mixed fashion against its counterparts. USD/JPY suffered a 68-pip drop, but GBP/JPY enjoyed a nice 123-pip rally from its intraday low. What the heck did the BOJ say anyway?

As it turned out, the BOJ kept its rates AND asset purchases like a good boy. The central bank held its rates at 0.10%, kept its credit loan program at 30 trillion JPY, and maintained its asset purchases at 40 trillion JPY. Apparently, the BOJ is on a wait-and-see mode regarding the euro zone’s debt crisis and the developments (or lack of it) in the U.S. economy.

Only the BOJ monthly report at 5:00 am GMT is scheduled from the Land of the Rising Sun today, but keep your eyes glued to the G20 meetings happening today. And while you’re at it, why don’t you check out the economic calendar to see if you can trade any other major reports today?

Good luck in your trades, homies!

[PipDiddy]

The Japanese yen got knocked down by the U.S. dollar, British pound, and Australian dollar in yesterday's trading, but at least it managed to score a win against the euro. USD/JPY struggled to hold on to the 79.00 handle as it closed at 79.09 while EUR/JPY slipped from its day open price of 100.04 to close at 99.47.

Japan didn't release any big reports yesterday, but the yen was able to benefit from the rise in Spanish bond yields as it gained ground against the euro. Against its other major counterparts, on the other hand, it seems that the yen was unable to rely on its usual safe-haven appeal!

The BOJ is set to release the minutes of its latest monetary policy meeting today at 11:50 pm GMT. This should shed more light on the central bank's recent rate decision and also provide some hints on their future monetary policy moves. Also due today is Japan's trade balance, which is expected to show that the deficit narrowed from 0.48 trillion JPY to 0.36 trillion JPY.

[PipDiddy]

The low-yielding Japanese yen didn’t make any significant moves against the Greenback yesterday and mostly consolidated within a tight range. USD/JPY has been simply bouncing around a 30-pip range for the last 24 hours. However, against the high-yielders like the euro and the pound, the yen was able to post some decent gains. EUR/JPY ended 68 pips higher while GBP/JPY closed 28 pips higher.

Earlier today, the country’s trade balance was released. It showed a 660 billion JPY trade deficit for the month of May, almost double the expected amount.

No other news report is scheduled to come out of Japan today, so the yen’s direction will probably be driven by events happening in other major economies. The Fed’s interest rate decision, for instance, will most likely have a strong effect on USD/JPY. Watch out for it at 4:30 pm GMT!