July 26, 2012
Despite Japan's trade deficit narrowing, the yen was still unable to tap its inner Samurai warrior as risk appetite kept it from rallying against most of its higher-yielding counterparts yesterday. EUR/JPY ended the day higher at 95.03 after opening at 94.38. Meanwhile, AUD/JPY finished the day 47 pips higher at 80.62.
It was reported that Japan's imports only outpaced its exports by 300 billion JPY in June. Not only did the figure top the forecast which was for a 390 billion deficit, the figure also translates to the smallest trade deficit we've seen in 9 months!
However, a deeper look at the report reveals that the figure reflects a 6.5% decline in imports and 1.4% drop in exports. This means that demand deteriorated in June which is ultimately bad news for Japan. Yikes!
On the slightly-brighter side of things though, the yen was still able to sneak some pips away from the dollar and the pound following disappointing data from the U.S. and the U.K. It scored a 2-pip win from the dollar as USD/JPY closed at 78.17 and 17 pips from the pound when GBP/JPY settled at 121.16 at the end of the day's trading.
Today, inflation and consumer spending reports are on tap and could affect the yen's price action.
At 11:30 am GMT, Tokyo's core CPI is expected to have remained steady at -0.6% in July while the national core CPI is seen to have been flat during the month. Then at 11:50 pm GMT, Japan's retail sales for June is anticipated to come in at 1.2%.
I have a feeling that market sentiment would be a big factor in the yen's price action today too. So aside from keeping tabs on these reports, make sure you also gauge the market's mood!
Last edited by PipDiddy; 07-25-2012 at 11:09 PM.
"The only cable I watch is the pound baby."