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!