Daily Economic Commentary: Japan

[PipDiddy]

You can't win 'em all, can you? Even though the Japanese yen was able to pocket some gains against the euro, it lost ground to the British pound and Australian dollar during yesterday's trading. Meanwhile, USD/JPY remained stuck below the 80.00 mark as it moved sideways for almost the entire day.

Japan didn't release any economic data yesterday, leaving the yen vulnerable to risk sentiment. Unfortunately for the lower-yielding currency, risk was on for a while after the Chinese HSBC flash manufacturing PMI showed a slight improvement and sparked rallies during the Asian session.

There are no reports on Japan's schedule for the rest of the day so the yen might take its cue from sentiment once more. Make sure you keep an eye out for any updates on the euro zone debt situation or for U.S. earnings reports as these have been dictating market sentiment for the past few days. Be careful out there!

[PipDiddy]

The BOJ must have been going nuts with joy after seeing yesterday's price action. For the first time since June, USD/JPY crossed above the 80.00 mark, as it climbed 48 pips to 80.31. Why are people dumping the yen?

Blame it on the rumors! Word on the street is that the BOJ might roll out another 10 trillion yen worth of easing on October 30. With elections just around the corner and the economy still weak, it makes sense for the BOJ to increase its stimulus efforts.

In other news, the latest inflation figures were published just a few hours ago, and it seems that they came in better than expected! Core CPI fell by just 0.1% last month, which is just half the decrease that most had anticipated. Still, with prices on the decline, it's clear to see that Japan hasn't shaken off its deflationary problems.

[PipDiddy]

Who was king of the pip hills last Friday? The yen was! Thanks to a plan released by Japan’s Economics Minister, the yen skyrocketed against its currency buddies. USD/JPY fell by 70 pips, EUR/JPY plunged by 100 pips, and Guppy completely erased all of its Thursday gains. What the heck did the Minister say?

In his announcement, Japan’s Economics Minister Seiji Maehara revealed that they would be spending 423 billion JPY to subsidize capital expenditure in areas hit by the nuclear plant disasters and earthquakes. They would also use part of the money to promote renewable energy and spending on training programs. Now that’s a plan!

Let’s see if the yen manages to retain its gains this week when a parade of economic reports are released. The retail sales printed a couple of hours ago already showed a drop from 1.7% to 0.4%. At 11:30 pm GMT today we’ll see the household spending, unemployment rate, followed by the preliminary industrial production at 11:50 pm GMT.

Tomorrow is a big day for the BOJ as it releases its monetary policy decision. Then, on Wednesday we’ll see the average cash earnings and housing starts. Last but not the least, the monetary policy meeting minutes will be released on Thursday at 11:50 pm GMT.

Good luck and good trading this week, kiddos!

[PipDiddy]

Risk aversion had the markets going nuts for the Japanese yen, lifting it against its higher-yielding counterparts. At the end of the day, it had gained 15 pips against the euro and 37 pips versus the pound.

Because of yesterday's risk-off environment, the markets didn't seems to mind so much that Japan's retail sales report showed a mere 0.4% uptick, instead of the 1.3% surge that many had forecasted. I did a little detective work and found out that Japan actually has the government to blame for the disappointing results. Apparently, its decision to end car subsidies took a big chunk out of retail sales!

In other news, Japan posted household spending and preliminary industrial production data just a few hours ago... and these reports were just as disappointing! Instead of posting a 0.8% increase, household spending fell 0.9%. Meanwhile, industrial production output declined at a faster pace than expected, as it recorded a 4.1% drop (versus the 3.1% forecasted decrease).

Later in the Tokyo session, we have the all-important BOJ monetary policy statement on tap. Many believe that we could see the central bank increase its asset purchases by another 10 trillion JPY. But there are also those that think that they may just shock the markets with a 20 trillion JPY boost. In any case, get ready to see some wild moves in the charts once the BOJ makes its announcement! Good luck and happy pipping, fellas!

[PipDiddy]

Apparently, when it comes to trick-or-treating, the Bank of Japan prefers the former! The BOJ disappointed the markets yesterday with its monetary policy moves, which caused the yen to spike up during the Tokyo session.

By the end of the day though, the buzz generally died down, and we saw mixed results for the yen. While USD/JPY closed 21 pips lower at 79.61, EUR/JPY bounced back to finish at 103.18, 100 pips of its lows for the day.

So how did the BOJ disappoint the markets?

Yes, the central bank did expand its asset purchase program by another 10 trillion JPY, increasing the total amount of its program from 80 trillion JPY to 90 trillion JPY. In fact, this data was leaked out last week, but still, many market players anticipated a much larger increase of 20 trillion JPY. As a result, we saw a classic “buy-the-rumor, sell-the-news”, and we saw a sharp drop in yen pairs following the statement.

With the likelihood that the NYSE will still be closed today, we may not see any strong moves in yen pairs during the New York session. Watch out though, during the London session, as you never know what might rock the markets!

[PipDiddy]

Ooomph! The yen was deep in the red zone yesterday after a worse-than-expected report from Japan made the yen unattractive. USD/JPY inched 22 pips higher while EUR/JPY registered a 30-pip increase. Some report, eh?

If you’re still wondering at which report I’m talking about, look no farther than Japan’s manufacturing PMI data. The report clocked in at 46.9, a figure that’s not only lower than the previous 48.0 reading, but is also the fastest pace of contraction in 18 months. Yikes!

Only the monetary policy meeting minutes at 11:50 pm GMT is scheduled for release today, so you might want to stay tuned for reports from the U.S. and the euro zone to see if a demand for low-yielding currencies like the yen would be seen today.

Good luck in your trades today!

[PipDiddy]

Somewhere deep inside the confines of the Bank of Japan, policy makers are dropping sake bombs left and right. After all, USD/JPY rose for the 4^th day in a row, and 12^th time in the past 15 trading days, as the pair closed 6 pips higher at 80.22.

Fine, it’s just 6 pips, but if you’re part of the BOJ, every pip matters! Keep in mind that at its last monetary policy statement, the BOJ announced an expansion of its asset purchase program by 11 trillion JPY, far less than what many market players were anticipating. As long as the yen keeps falling, the BOJ may choose to keep their fingers off the QE trigger.

Nothing lined up for today, but now that USD/JPY is fast approaching October’s high at 80.35, it’ll be interesting to see how yen pairs play out. Good luck trading today!

[PipDiddy]

Oh well! You win some, you lose some. While EUR/JPY finished the day 54 pips lower at 103.20 as well as GBP/JPY which was down 42 pips at 128.83, the yen failed to end its losing streak against the dollar. USD/JPY continued to rally higher, finishing Friday’s trading at 80.43.

Don’t be surprised! The lack of economic reports from Japan left the yen vulnerable to market sentiment. Concerns about Greece allowed it to rally against the euro and the pound while the positive U.S. employment report made it no match to the dollar.

We’ll probably see the currency take its cue from market sentiment today given that our forex calendar is still blank for data from the Land of the Rising Sun. So be on your toes, folks!

[PipDiddy]

Make no mistake about it, the yen definitely got its groove back in yesterday's trading! With the markets in risk-off mode, it gained 49 pips against the euro, 61 pips against the pound, and 19 pips against the dollar. Will it score another hat trick today?

It seems that yen price action was heavily affected by risk sentiment yesterday, which worked in favor of the Japanese safe haven. With the markets cautious ahead of the U.S. elections, and concerns about Greek's next bailout tranche back in the spotlight, the yen was once again a top choice among investors.

Today, it looks like we'll have to continue keeping a close eye on risk sentiment, as Japan won't be publishing any major reports. With that in mind, the yen might just extend its gains if we don't see a shift in risk appetite.

[PipDiddy]

The yen got kicked to the curb as talks of further easing from the BOJ once again hit headlines. After opening at 80.27, USD/JPY closed higher at 80.41. Meanwhile, EUR/JPY was up 39 pips at 103.05 by the end of the New York session.

A senior official from the BOJ said that the central bank still not sure about how effective its most recent stimulus plan would be. Consequently, his remarks sparked speculations that the BOJ could ease monetary policy even further. Yikes!

No reports from from Japan are due today. This probably means that the yen would take its cue from the U.S. elections so be sure you're on your toes for it!