Daily Economic Commentary: Japan

Yen crosses took some hits in yesterdays trading rounds, as higher yielders benefited from a run of risk appetite. The EURJPY and GBJPY both saw themselves floating slightly higher. Could we see the same today? Or will the yen strike back?

Japan was hit with some poor economic data yesterday, as both the household spending and industrial production reports came in worse than expected. Household spending fell by 0.5%, after it was expected to have risen by 1.5%. Meanwhile, industrial production fell by 0.9% - consensus was for a decline of just 0.5%.

The labor market got some good news… well, good news in the sense that the unemployment rate didn’t go up! The jobless rate remained at 4.9%, which was in line with expectations.

No biggies coming out of Japan today, but that doesn’t mean you shouldn’t be on the lookout for data coming out from other counties! Watch out for shifts in risk sentiment, as this has been what’s driving the yen as of late.

The Japanese yen wasn’t in such a good mood yesterday as it fell against most of its counterparts, except for the euro. It seems like the yen still hasn’t moved on from the brunt of weak economic figures released earlier this week.

Only the manufacturing PMI was released from Japan yesterday. The report showed that the industry continues to expand as the reading stayed above the 50.0 mark. Still, the March manufacturing PMI dipped to 52.4 from 52.5 in February, implying that the expansion was slower during the month.

Does this mean that weak Tankan figures are in the cards? The Tankan survey, which is due 11:50 pm GMT today, could show that manufacturing and non-manufacturing conditions remained weak for the first quarter of the year. Although the readings are expected to stay in the negative zone, both the manufacturing and services component of the survey are expected to show that business conditions are worsening at a slower pace this time around.

My buddy Forex Gump has an interesting blow-by-blow analysis concerning the possible results of the Tankan survey, saying that weaker than expected figures could push the USDJPY above the 93.00 handle. Keep an eye out for that!

Risk appetite in the forex market drove the yen back on the sidelines yesterday. The yen slipped flat on its face against all of the other major currencies. Will it be able to recover some of its losses today? We’ll see.

Japan’s Tankan manufacturing index for the first quarter of 2010 improved to -14 from -24. The non-manufacturing version of the account also improved to -14, which is slightly better than the -15 consensus, from -22. A negative reading indicates a deteriorating condition in the sector. Despite this, the yen still managed to gain some support soon after the results were released because of a better than expected tally in Japan’s service sector. However, traders just took this as an opportunity to get a better price to sell the yen again. The yen continued to drop after due to the persistence of risk appetite in the market.

Later, BOJ Governor Masaaki Shirakawa will deliver a speech at the Bank of Japan. Any dovish statement there could send the yen lower. I doubt, however, that he would drop any hints regarding the bank’s future monetary policies since he will be speaking at a welcoming ceremony of new bank employees. Still, be on your toes!

The yen proved to be the biggest loser in last week’s trading sessions, falling in value against most major currencies. It looks like improving risk appetite will continue to put downward pressure on the yen’s value.

The only high-profile economic news to watch out for this week from Japan is the BOJ’s interest rate decision. It is widely expected for the BOJ to keep the benchmark interest rate unchanged at 0.10%, so the focus of traders would probably fall on the accompanying statement. If the bank decides to expand its quantitative easing program, then we could see the yen experience further losses. The BOJ will announce its decision on Wednesday.

For the first time in a week, the yen was able to slice the dollar like a sushi roll, as it posted some decent gains. Some see this as a technical correction given the strong upmove we have seen the past couple of weeks. Could this be an opportunity for traders to get in at a cheaper price?

No biggies coming out today, so watch out for news coming out from other countries. If risk appetite that was triggered from last week’s NFP report finally follows through, the yen may just give back its gains from yesterday.

Tomorrow should be more exciting, as the Bank of Japan will be making its interest rate statement. Remember, in its last monthly meeting, the central bank decided to expand quantitative easing measures. This month, traders will be waiting to see how upbeat the bank will be in their statement. If BOJ officials show more optimism and actually crack a smile or two, it may just give the yen more support.

The yen managed to squeeze some gains off the greenback, euro, and pound ahead of the release of the BOJ’s monetary policy statement. Strong economic figures also provided a boost for the yen, which closed at 93.89 against the greenback.

Japan’s composite set of leading indicators stepped up from 96.9% to 97.9% in February, marking its longest streak of gains since 1997. Whee! The recent improvement in Japan’s broadest measure of economic performance was led by a recovery in export demand. Components of the report showed that the surge in exports is starting to trickle down to employment and consumer spending, boosting Japan’s overall economy. Maybe this could lead the central bank to upgrade their growth forecasts for the year…

The BOJ has yet to release their monetary policy statement and hold a press conference probably later today. Keep an eye out for upbeat comments from central bank officials, which could allow the yen to push for more gains. Even though the BOJ is widely expected to keep rates at 0.1%, if they end up delivering a more bullish statement than the US Fed’s skeptical one yesterday, the USDJPY could make a mad dash for the 93.00 handle.

The yen dominated the FX market yesterday, banking a landslide win against ALL the other major currencies. Will the yen be able to extend its run?

Yesterday, the Bank of Japan kept its interest rate unchanged at 0.10% but also stated that the economy is already picking up. The improvements in the economy was said to have been due to the positive developments in some of its major trading partners. Domestic demand in Japan, however, is still fragile which places some pressure on the BOJ to hold its monetary easing policies.

Across the Pacific, the US consumer credit showed an unexpected drop of -$11.5 billion in February. A slide in credit indicates that consumer demand is not yet stable. Risk aversion, as a result, intensified which led investors back to the safety of the greenback and the yen.

Japan’s February core machinery orders also slid by 5.4% after already losing by 3.7% during the month prior. A drop here suggests that firms weren’t spending for capital expansions despite the increase in Japan’s exports. And soon after the result was released, the yen lost some support.

Japan will be releasing the BOJ’s monthly report and the Eco Watchers survey in March later at 5:00 am GMT. The BOJ recently stated that the economy is already improving but some data like the core machinery orders shows otherwise. In any case, any hawkish outlook could further lift the yen.

It looks like the yen’s massive correction has finally come to an end as it ended the day with a loss in yesterday’s trading session. The yen fell against the dollar, the pound and the euro.

The Bank of Japan’s monthly report released yesterday showed that was slightly more optimistic though. It revealed that the bank believes that financial credit conditions have eased due to their very accommodative monetary policy. Additionally, the bank said that deflation will soon moderate as demand for Japanese goods start to pick up.

No important data from Japan today so the yen would most likely be driven by risk sentiment flows and economic news coming out from other major economies, particularly Ben Bernanke’s speech at 12:30 am GMT today.

The yen took a hit across the board as risk appetite came back in vogue last Friday, although it did hold its own against the USD. After gaining 4 out of 5 days last week, will the yen continue to rally versus the “mighty” dollar?

It seems that risk sentiment has shifted, as word on the European grapevine is that the EU will be backing up Greece by providing a bailout package. This allowed investors to release a sigh of relief, as this is a sign of more unity from the EU.

No major data is scheduled for release this week. Just take note that the minutes of the last MPC meeting are due today at 11:50 pm GMT. This could give more insight as to what was discussed at the last meeting, like the BOJ’s views on interest rates, quantitative easing measures and what’s the best sushi place in Tokyo.

Keep 6:30 am GMT, Thursday (April 15) marked though, as Bank of Japan Governor Masaaki Shirakawa will be delivering a speech. As the head of the BOJ, his words can have an significant impact on the currency markets.

The Japanese yen must be popping a bottle of sake by now since it successfully erased some of its losses against the Aussie, euro, and pound. But would it be able to stay afloat now that the BOJ is split between extending and pausing its lending program?

The minutes from the latest BOJ monetary policy meeting showed that a couple of policymakers were very much opposed to adding to the central bank’s lending program. Aha, some dissenters in the ranks! Policymakers Tadao Noda and Miyako Suda insisted that there was no economic justification for further monetary policy easing. However, they were outnumbered as the rest of the policymakers voted to double the BOJ’s lending to commercial banks in order to fight deflation in the country.

Japan won’t be releasing any economic reports today so be aware of possible shifts in risk sentiment, which could affect the movement of the yen. Tomorrow, BOJ Governor Masaaki Shirakawa is scheduled to deliver a speech at 6:30 am GMT. Stay on your toes for hints on the BOJ’s future monetary policy moves!

The yen came out mixed yesterday, pocketing some marginal gains over all the other majors except the CAD and CHF. The yen could be bound for a major move today. The question now is: which way will it go?

Japan as well as the other countries did not release any market moving reports yesterday. The lack of major economic catalyst caused the yen to just trade in a range-bound manner. Today, though, could be different with the issuance of the US’s CPI and retail sales figures. Positive figures from these accounts could spur risk taking which could be detrimental for the JPY.

Today at 6:30 am GMT, BOJ Governor Masaaki Shirakawa will deliver a speech at the Annual Trust Companies Association, in Tokyo. Any dovish statement could further weaken the yen.

The yen found itself holding on to the short end of the stick when a slight case of risk appetite hit the foreign exchang markets yesterday. Although the yen ended the day hardly changed against the dollar, it gave up some ground versus the euro and the pound.

The only news of interest yesterday from Japan yesterday was a talk by BOJ Governor Masaaki Shirakawa. In his talk, he said that Japan has been showing signs of sustainable recovery, thanks to the pick up in global demand for its exports and the bank’s stimulus measures.

No data coming out today, so watch out for data coming out of the US for clues on where the yen is headed.

Karate chop! The yen waxed in and waxed out against higher yielders, with its most impressive hits coming against the euro. The EURJPY dropped almost 100 pips to close at 126.37.

Some analysts are pointing to the recent GDP report from China - which printed a ridonculous figure of 11.9% growth last quarter – as the primary reason why the yen gained yesterday. The argument is that China will need to curb their growth and one way they could do this is by letting the yuan appreciate. This caused some risk aversion to crawl back into the market, allowing the yen to rally. For more insight about China’s yuan issue, take a look at my buddy Forex Gump’s latest post.

With no major data coming out today, keep an eye out on news scheduled for release in other countries, as well as for any shifts in risk appetite. As I’ve said time and again, risk sentiment can change on a dime, so be careful!

Thanks to risk aversion, the Japanese yen enjoyed quite a nice run before last week came to a close. News of the Goldman Sachs fraud pushed the USDJPY to the 92.00 area during Friday’s US trading session.

When news of SEC’s fraud accusation to Goldman Sach’s broke out, equities fell and traders began to unwind their carry trades. Since most carry trades are financed through the lower-yielding Japanese yen, this unwinding caused yen pairs to lose ground. The AUDJPY tumbled to the 85.00 area while the EURJPY slid below 125.00.

Today, Japan is set to release its household confidence report and tertiary industry activity index. Household confidence is expected to improve in March as the index could climb from 39.8 to 40.2 during the month. Meanwhile, activity in the services index is expecting a 0.9% slowdown for February after enjoying a nice 2.9% pickup in January. Watch out for the actual figure at 11:50 pm GMT.

On Wednesday, Japan’s trade balance will be released at 11:50 pm GMT. Their trade surplus could widen from 0.47 trillion JPY to 0.66 trillion JPY, possibly reflecting an uptick in exports for the month of March. Stronger than expected figures could allow the yen to push for more gains.

No other economic reports are due from Japan for the rest of the week but keep your ears open for BOJ Governor Masaaki Shirakawa’s speech on Thursday. Be on the lookout for his assessment of the Japanese economy and for hints on the central bank’s future monetary policy moves.

The yen choked late in yesterday’s session and lost all of its gains and then some over all the other major currencies. The yen bulls were caught off guard by a new development regarding Goldman Sachs that forced them to hand over their lead.

The yen was well on its way to a landslide victory when suddenly the fraud charges that was brought on Goldman Sachs by the SEC only showed a 3-2 vote. The vote count indicated that the SEC did not have a very strong case against the company. This somehow lifted the market’s optimism which led to a broad-based yen and dollar selling.

Japan just released its March household confidence report and tertiary activity index in February. The former reached 40.9 in March from 39.8 while the latter also came in better at -0.2% in February against the -0.9% expected. The results, though, did not have much impact on the yen’s short term valuation.

No other economic reports are due today in Japan. The yen, however, could experience some volatility with the release of the UK’s CPI, Germany’s Zew economic sentiment index, and the Bank of Canada’s interest rate decision. So you better stay tune!

No thanks to improved risk appetite, the yen found itself holding on to the short end of the stick in yesterday’s trading session. It lost against all the major currencies like the pound, the euro, the Aussie and yes, even the dollar.

The only data of interest today is Japan’s trade balance at 11:50 pm GMT. The country’s trade balance, which measures the net difference in value between imported and exported goods, is predicted to show a ¥660 billion surplus in February, up from the ¥470 billion surplus seen the month before. Looks like the Bank of Japan is getting exactly what it wants, a weakening yen and rising exports…

After taking a beating to start the week, the yen finally regrouped, which led to mixed trading against other majors. The USDJPY remained steady, ending trading up just 5 pips at 93.20, while the EURJPY closed at 124.86, down 30 pips from its opening price.

Trade balance figures released late yesterday came in to meet consensus, printing a surplus of ¥660 billion. This was a significant increase from the ¥470 billion figure printed in February, and as export rose by 43.5% in March. This marked the 4th consecutive month that exports have risen!

An interesting detail to note is that exports to China rose by 47.7%. Now, China has been making moves to curb their crazy, ridonculous double digit growth, as they fear that they could get hit by a run of sharp rise in inflation. If the Chinese continue to make more tightening moves, will Japan take a hit? Let’s see how this plays out over the next couple of months.

No hardcore data on deck for the rest of the week, but BOJ Governor MasaakiShirakawa is due to speak at the Economic Club in New York City. He could drop more clues about what direction the BOJ wants to take in terms of quantitative easing measures.

So to end… Exports are on a rise in Japan, but let’s see how long that continues. Tonight, Shirakawa will be speaking, so make sure you got your remote control by your side as you switch between the news channel and the NBA playoffs.

The Japanese yen had a mixed performance yesterday as it strengthened against the euro, weakened against the greenback, and ended almost unchanged against the pound and the Aussie.

Japan didn’t release any economic reports yesterday, which was probably the reason why the yen couldn’t establish a clear direction.

In his speech yesterday, BOJ Governor Masaaki Shirakawa discussed the economic and financial problems of both Japan and the US. He compared Japan’s “Lost Decade” with the recent US financial crisis and concluded that it was overconfidence that caused the bubble to burst. He added that monetary policy also plays a huge role in preventing another crisis, saying that the central bank should focus on both short-term and long-term price stability in order to achieve sustainable growth.

Today, Japan will release its all industries activity index. The index for February is expected to dip by 1.3% after rising by 3.8% in January, signaling that overall business activity slowed down. A weaker than expected reading could be negative for the yen but don’t forget that the tertiary industry activity index, which accounts for almost 60% of overall business activity, came in stronger than consensus early this week. Could we be in for an upside surprise later on? Stay tuned for the actual figure at 4:30 am GMT!

Friday was another day of disappointment for the yen bulls as the JPY incurred a broad-based loss against all the other majors. Will the JPY be able to stage a rally this week? Stay tune.

Japan’s all industries index dropped more-than-expected by 2.3% in February, suggesting that business activity in Japan had become more stagnant than the economists’ estimate. It was only projected to dip by 1.5% during. January’s figure was also negatively revised to 3.4% from 3.8%.

The yen continued to drop when news that Greece asked $55 billion from the IMF and the other EU-member nations to finance part of their dues upped the investors’ confidence in the market, leading them to sell the safer currencies like the yen.

This week will start for Japan with the release of its retail sales data on Tuesday. The gain in Japan’s year-over-year retail sales in March was anticipated to have slowed to 3.7% from 4.2% due to the 0.6% monthly dip that it had during the month.

On Thursday, Japan will issue a bunch of economic data which includes the household spending account, Tokyo and national core CPIs, unemployment rate, and average cash earnings. Despite the projected 0.2% drop in average cash earnings, household spending is still seen to have increased by 0.7% on a yearly basis. Meanwhile, the country’s Tokyo core CPI in April is estimated to be at -2.0% from -1.8%, indicating that the country’s deflation is worsening. The national core CPI, however, likely remained at -1.2% in March. On a separate note, Japan’s unemployment rate probably stayed at 4.9% as well in March.

So among the aforementioned data, the only positive one is the country’s industrial production since it will possibly print a 0.7% advance last month following a 0.6% contraction in the previous period. The result, by the way, will be reported on Friday.

Later that day, the Bank of Japan will also make their interest rate decision. Given the overall drop in general prices in Japan, the BOJ will most likely keep its interest rate unchanged at 0.10%. Keeping the interest rate low, though, would be bearish for the yen.

The absence of any high-profile economic event yesterday caused the yen to trade mixed against other major currencies yesterday. The yen was able to gain slightly versus the greenback, but loss out against the pound and the euro.

The only important data scheduled to come out today from Japan is its retail sales report at 11:50 pm GMT. It is predicted to show that sales grew fell 0.6% in March, opposite the 0.9% increase seen the month before. Year-on-year, however, this translates to a 3.6% rise. If the actual figure reported is higher than expected, we could see the yen receive some buying support just like in March.