Daily Economic Commentary: Japan

[PipDiddy]

And the yen scores again! The Japanese currency was able to benefit from risk aversion for another day as it was able to end higher against all of its major counterparts, including the safe-haven U.S. dollar. USD/JPY closed at 77.72 after starting the day at 77.80. Can the yen hold on to its recent gains and go for more?

Japan didn't release any economic reports yesterday as risk sentiment drove price action among yen pairs. Weaker than expected U.S. data, combined with bleaker prospects for the euro zone, kept risk-taking at bay and propped up the lower-yielding yen.

There are no reports due from Japan today, which means that the yen pairs could continue to move to the tune of risk sentiment. If we see another round of weaker than expected data or if we hear of negative developments in the euro zone, the Japanese yen just might chalk up another winning day!

[PipDiddy]

With the return of risk appetite in the markets yesterday, the yen's winning streak against its higher-yielding counterparts was cut short as it lost ground to the euro, pound, and Aussie. Against the Greenback though, the yen was still able to catch some gains as USD/JPY closed 11 pips down from its 77.72 open price.

Japan didn't release any economic data yesterday, leaving the yen helpless amidst the risk on environment. As it turns out, traders were happy about Spain's recently released austerity reforms and budget plans, and this resulted in a risk rally during the London session.

Today, Japan just released a bunch of economic data which came in mixed so let me break it down for y'all:

First, the good news. Manufacturing PMI saw a slight improvement as it climbed from 47.7 to 48.0 in September, indicating a slower contraction during the month. Household spending also saw a nice improvement as the annual figure rose from 1.7% to 1.8% in August, higher than the estimated 1.1% reading. Lastly, retail sales posted a surprise 1.8% increase as analysts where expecting to see a 0.3% decline.

As for the bad news, deflation is still a big issue in Japan as Tokyo's core CPI missed expectations of a 0.2% drop and posted a 0.4% decline instead. National core CPI also posted a negative reading (-0.3%) for September, following the 0.3% drop seen last August. Preliminary industrial production also missed the mark as it showed a 1.3% decline, which was way worse than the projected 0.4% decrease.

There are no other reports due from the Japan today so make sure you keep an eye out for any updates that could change risk sentiment. Stay on your toes!

[PipDiddy]

You can't win 'em all, can you? The Japanese yen had a mixed performance last Friday as it ended higher against the British pound and the Australian dollar but closed in the red against the euro. Will it be able to find a clearer direction today?

Japan's economic data also came in mixed last Friday as manufacturing PMI, retail sales, and household spending beat expectations while CPI figures confirmed that deflation was still a huge problem in Japan.

Earlier today, Japan's Tankan survey printed better than expected results for Q3 2012. The manufacturing component came in at -3, which was better than the consensus at -4 but worse than the previous -1 reading. The non-manufacturing component held steady at 8 instead of dipping to 7 as analysts predicted.

With no other reports set for release from Japan, the strong Tankan figures might be enough to keep the Japanese yen afloat for the rest of the day... unless risk appetite is on, that is! Stay on your toes, everyone!

[PipDiddy]

We didn't get much action from the yen to start the quarter. It barely budged against the dollar as USD/JPY just climbed 3 pips to 78.02. Meanwhile, EUR/JPY found itself 37 pips higher at 100.55. Will we see bigger moves today?

As I had mentioned yesterday, Japan's Tankan survey delivered a couple of upside surprises, but it wasn't enough to boost demand for the yen. And today's average cash earnings report, which also came in better than expected at 0.2% (versus -0.9% forecasts), hasn't gotten much attention either. Bummer!

What this suggests is that yen price action is still heavily dependent on the markets' risk appetite. So if you plan on trading the yen pairs today, make sure you monitor risk sentiment and be on the lookout for new developments that may change the markets' mood!

[PipDiddy]

A better-than-expected report? So what? Like its low-yielding comrades, the yen performed with mixed results against its counterparts yesterday. The yen gained on the comdolls, but lost against the other major currencies. Here’s how it happened.

Thanks to a surprise cut in the RBA’s interest rates, the yen gained against the comdolls yesterday. But the bears also got busy with the other yen pairs as the better-than-expected manufacturing report from the U.S. supported a relatively weak risk appetite. Of course, it also helped that Japan’s average cash earnings went up by 0.2% in August, the first rise in four months, after dropping by 1.6% in July.

The Land of the Rising Sun won’t be releasing any economic data today, so make sure you stay glued to the tube for any news that might affect risk sentiment!

[PipDiddy]

The yen gave up a lot of ground to its major counterparts yesterday as both USD/JPY and EUR/JPY climbed 40 pips. Can't the yen get any love?

To the delight of the Bank of Japan (BOJ), the yen found itself towards the bottom of the food chain yesterday, with only the Aussie and the Kiwi to feed on. Word on the street is that the BOJ might step in if USD/JPY falls below 77.00, but if this yen selling keeps up, the central bank won't have to meddle in the markets and intervene to weaken the yen!

Nothing on the economic calendar from Japan today. In the meantime, y'all should practice your risk sentiment-tracking skills as the markets' risk appetite will probably dictate yen price action today. Peace and good luck trading, homies!

[PipDiddy]

Score another one for the BOJ! Thanks to risk appetite in the markets, the yen clocked in another losing day against its major counterparts. Though it inched 7 pips higher against the low-yielding dollar, it lost 81 pips to both the euro and the pound.

There were no reports released from the Land of the Rising Sun yesterday, but the yen got clobbered across the board when the BOE and the ECB both didn’t add to their stimulus measures. Appetite for high-yielding currencies became even stronger in the U.S. session when the U.S. released its weak economic reports.

Today it’s the BOJ’s turn under the spotlight as it is scheduled to publish its interest rate decision. Investors are at the edge of their seats in guessing whether or not the BOJ will follow up on its decision to expand its asset purchases last month. Will the BOJ follow the other central banks’ footsteps and step back this month, or will they fuel the yen weakness by announcing more stimulus?

Don’t even think of missing the BOJ’s announcement today!

[PipDiddy]

Last Friday, the Japanese yen ended higher against most of its major counterparts, except for the U.S. dollar which benefitted from the upbeat NFP report. USD/JPY closed at 78.67 while EUR/JPY ended the day at the 102.50 minor psychological level.

The BOJ made no changes to their monetary policy during their latest rate statement, but noted that Japan’s export sector isn’t doing so well. According to BOJ officials, industrial production and export activity have been decelerating for the past few months because of low demand from Japan’s trade partners. Business investment and consumption, on the other hand, have remained resilient so far.

Japan is set to release its current account balance today and possibly print a surplus of 0.52 trillion JPY, up from the 0.34 trillion JPY surplus during the previous month. A stronger than expected figure could boost demand for the yen so y’all better keep an eye out for the actual release at 11:50 pm GMT.

For the rest of the week, Japan has a bunch of medium-tier reports set for release. Although these reports aren’t expected to have a huge impact on the yen pairs’ price action, it might be helpful to take note of how the Japanese economy is faring based on these figures.

Tuesday has the BOJ monthly report and the Economy Watchers Sentiment figure due while Wednesday has the preliminary machine tool orders data, core machinery orders figure, and BOJ monetary policy meeting minutes on tap. By Thursday, Japan will release its tertiary industry activity index, which is expected to post a 0.5% improvement.

[PipDiddy]

With traders scaling back on their risky positions, the yen dominated yesterday’s trading scene. EUR/JPY dropped for the first time in 8 days, falling 88 pips to finish at 101.61. Meanwhile, GBP/JPY closed at 125.57, down a whopping 134 pips from its opening price.

Earlier today, a report showed that the current account posted a surplus of 450 billion JPY, slightly more than the projected 420 billion JPY. While this was better than anticipated, it was also less than the previous month’s figure of 630 billion JPY. This indicates that less people are buying the yen in order to purchase Japanese goods, which may mean that they feel the yen is getting too expensive.

This just provides more ammunition for the BOJ to pull the intervention trigger. I wouldn’t be surprised if we see more jaw-boning and threats from the central bank in the coming weeks!

[PipDiddy]

The yen cruised through the charts like a boss in yesterday's trading. USD/JPY ended the New York session lower at 78.24 after opening at 78.34 while EUR/JPY closed with a 93-pip loss at 100.68.

With risk aversion spooking investors out of higher-yielding currencies, it was no surprise to see the yen trump its major counterparts. Jitters over the equity markets spilled over to the forex hood as investors braced for what could be a disappointing earnings season. On top of that, concerns about the fate of Spain if it doesn't ask for a bailout gave traders one more reason to seek the yen's safety.

If the sour market sentiment carries on in today's trading, don't be surprised to see the yen extend it's gains. But don't get too excited buying the currency, all right? Keep an ear out for BOJ Governor Shirakawa's speech at 6:00 am GMT today. We could hear some jawboning that could send the yen lower.