Daily Economic Commentary: Japan

[PipDiddy]

Mixed day for the yen, as it edged higher versus the euro but took its bumps and bruises versus the pound. EUR/JPY closed 14 pips lower at 96.90, while GBP/JPY rose 21 pips to finish at 123.70.

No data on tap from the Land of the Rising Sun, but do keep an eye on more developments from the euro zone. We’re starting to hear more rumblings about the European debt drama, which could eventually trigger a wave of risk aversion that benefits the yen.

[PipDiddy]

Guess who has a huge letter "L" on its forehead? That's right, it's the Japanese yen! The lower-yielding currency was a huge loser in yesterday's trading as risk appetite improved in the forex market. USD/JPY jumped up from its 78.87 open price to close at 79.31 while EUR/JPY ended the day just one pip below the 78.00 handle.

There were no reports released from Japan yesterday, leaving the yen at the mercy of risk sentiment. Unfortunately for the lower-yielding currency, traders' spirits were boosted by a fresh wave of good news, particularly from the euro zone. As it turns out, Spanish bond yields dropped to their lowest level in two months while German Chancellor Merkel pledged to do whatever it takes to save the euro.

Japan's economic schedule is still empty for today which means that yen pairs could still move to risk sentiment's whim. Unless we hear of any bad news from the major economies, the yen might keep losing ground to its counterparts as risk appetite could stay in the markets before the week comes to a close.

[PipDiddy]

The great thing in forex is that even though you’ve struck out more than 3 times, you’re still not out! Last Friday, the yen marked its fifth losing day against the dollar as positive data came out of the U.S. USD/JPY, which began the day at 79.31, closed out the U.S. trading session at 79.55.

The major market mover last Friday was the University of Michigan consumer sentiment survey. It came in at 73.6, which was slightly higher than the 72.3 the market had initially expected. The better-than-expected reading provided a lot of support to the dollar.

No red flags on Japan’s economic calendar this week. This means the yen will probably get its direction from things happening in other major economies like the U.S.

[PipDiddy]

Just like the rest of the market, yen crosses pretty much stayed in range as there was no real hard-hitting news to hit the airwaves. EUR/JPY finished 19 pips lower at 98.05 while GBP/JPY closed at 124.74, also 19 pips below its opening price.

We could be in for another snoozefest, as the only data coming out from Japan today is trade balance figures at 11:50 pm GMT. Expectations are that the monthly deficit for July to be at 460 billion JPY. If the data shows that exports are continuing to shrink, it would give the Bank of Japan more reason to intervene and weaken the yen.

[PipDiddy]

The yen showed us exactly why the saying "you win some, you lose some" came to be as it strengthened against the dollar, Swissy, and Loonie, but weakened against the euro, pound, Aussie and Kiwi. Will it put up more consistent results today?

The recently released July trade balance report came in better than expected, but it really didn't do much to get the yen moving. Japan's deficit widened from .32 to .33 trillion JPY instead of expanding to .46 trillion JPY, as most economists had predicted.

The main culprit behind Japan's deficit? Europe's weakness and China's slowdown! Apparently, soft demand from these two economies (two of Japan's largest trading partners) did a number on exports last month. Yeouch!

Looking at the economic calendar, it seems like we'll have to chew on that bit of news for a while as Japan won't be publishing any reports today. In the meantime, I suggest you monitor risk sentiment as it could be the deciding factor on whether the yen will rise or fall today.

[PipDiddy]

Aha! It looks like the yen was able to tap its inner ninja in yesterday's trading, sneaking pips away from its counterparts despite negative data. USD/JPY closed the day lower at 78.54 after opening at 79.24. Meanwhile, EUR/JPY finished the day 42 pips below its opening price at 98.34.

It was reported yesterday that Japan incurred a trade deficit of 517.4 billion JPY in July, worse than an expected reading of 270 billion JPY. But it seemed like traders easily shrugged off the negative data as concerns about Europe lingered and the FOMC showed that the Fed is pretty eager to launch more stimulus measures.

Will the yen extend its gains today?

With our forex calendar blank for reports from the Land of the Rising Sun, the answer to that question will probably depend on market sentiment. So be sure you keep tabs on the reports we have on tap for the yen's counterparts, ayt? Peace out!

[PipDiddy]

Due to the absence of market-moving data, the yen’s price action yesterday was as mixed as a bag of Trailmix! While the yen ended the day higher against the dollar and the pound, it fell short versus the euro.

The Corporate Services Price Index (CSPI), which measures the change in the price of services purchased by corporations, was released earlier today. It was forecasted to show a decline of 0.2% and it came in as expected.

No economic data scheduled for release from Japan, and with the weekend fast approaching we could see very little movement from the yen. Let’s see how today plays out.

[PipDiddy]

USD/JPY was finally able to recover last Friday after it had lost for 4 consecutive days. The pair closed at 78.70, 25 pips higher from where it had begun the day. Is a bullish reversal in the works?

Judging from the trend, it looks like the recent move up was mainly a retracement, and not yet a true reversal. There has been no significant change in the fundamentals, and traders could have simply been taking profit.

No red flags on Japan’s economic calendar today, but there are a bunch of important tier 2 reports scheduled for release on Thursday and Friday. On Thursday, watch out for Japan’s retail sales report. On Friday, the country’s inflation figures and unemployment rate report will be on focus.

[PipDiddy]

Due to the absence of economic catalysts, most of the U.K. in holiday, the yen was completely directionless yesterday. It traded mixed across the board, gaining slightly versus the euro and pound but losing against the dollar.

Japan’s economic cupboard today will be completely empty again. This means that the yen will probably be mostly driven by events happening in other major economies.

Keep a close eye on the CB Consumer Confidence survey that will be released in the U.S. as it could indirectly have an effect on the yen’s price action. If it comes in better-than-expected, the yen could once again sell-off versus the dollar.

[PipDiddy]

With barely any economic data from Japan, the yen showed mixed price action against its counterparts. USD/JPY fell by 24 pips to 78.52, but EUR/JPY capped the day at 98.69 after hitting an intraday low of 97.89.

Aside from the hoopla about the Fed’s QE3 decision this weekend and the ECB’s plans on its bond-buying program, the yen bulls and bears traded on the BOJ’s surprising decision to cut its economic growth assessment for the first time in a year.

According to the central bank, the underperformance of the U.S. and Chinese economy, as well as the onslaught of the euro zone debt crisis, have taken its toll on the world’s third largest economy. For investors, this is a huge change from its previous release where the BOJ had said that the economy is growing moderately. Yikes!

Only the retail sales data at 11:50 pm GMT today is scheduled for release in the Land Down Under, so you might want to pay attention to any other news that might affect the demand for the low-yielding yen.