The yen was at the forefront of the attack last Friday, leading the way in the currency wars. Thanks to a boost from some risk aversion weaponry, the yen gained against higher yielding currencies.
The yen got a boost from a drop in risk sentiment last Friday, as equity markets took some hit. This put to rest some rumors that the yen would not benefit from risk aversion moves, as was the gossip throughout last week.
Still, I remain hesitant to quickly dismiss Japan’s shaky fundamentals. Take note, Naoto Kan just got appointed as the new Prime Minister and he does have a history of wanting a weaker yen. If he puts more pressure on the BOJ to help his cause (ahem, currency intervention!), it could lead to yen weakness down the line.
No red flags coming out today, but stay tuned tomorrow when core machinery orders data is released tomorrow at 11:50 pm GMT. Early predictions are that orders rose by 1.2% from March to April, down from the 5.4% rise we saw the previous month. Are people cutting down on their orders on Playstation 3’s? Ha – just kidding, that doesnt count as core machinery, although it is one hardcore piece of equipment! In any case, if this report comes in better than expected, it would be a good signal that manufacturing activity is picking up in Japan.
After the yen’s strong run last Friday, the currency decided to take a break and slowdown yesterday. It paced back and forth between yesterday’s highs and lows, before eventually closing the day with minor days. The USDJPY, for one, ended the US trading session 30 pips lower from its Asian session opening price.
The important piece of data to keep an eye out for today from Japan is the report on core machinery orders at 11:50 pm GMT. The pace of increase in orders is predicted to have tapered down to 1.2% in April from 5.4% in March. Rising orders are considered good for the Japanese economy because it could lead to improvements in the manufacturing sector.
The yen’s movement was a bit unsteady yesterday as traders were still wary about new Prime Minister Naoto Kan’s leadership. As a result, the yen ended slightly lower against most of its counterparts.
Prime Minister Kan stepped into office yesterday, prompting many traders to worry whether he would continue to push for a weaker yen. Aside from that, the weakness in Japan’s leading indicators also weighed the yen down. The composite index landed at 101.7% in April, down a couple of notches from the 101.9% reading in March, instead of rising to 102.8% as expected.
In a few hours, Japan will release its core machinery orders report, which could post a 1.2% increase for April. Core machinery orders were up by 5.4% in the previous month and another monthly increase could indicate that production would rise at a healthy pace. Better than expected figures could provide support for the yen so stay tuned for the actual report due 11:50 pm GMT.
Later today, the final GDP reading for the first quarter of 2010 will be released. The report is expected to post a 1.1% expansion for the period, downwardly revised from the 1.2% growth previously reported. Along with this GDP report, the consumer goods price index and the GDP price index, both indicators of inflation, will be released. These indicators are expected to confirm that Japan is still deep in deflation.
Yen trading remained as tight as a California roll, as yen pairs basically stayed within their respective ranges. With high impact reports coming out from other countries, could we see some breakouts take place?
Japan got some good news yesterday, as all of its reports posted relatively positive figures.
Firstly, core machinery orders rose by 4.0% last April, which was much better than initial projections of an increase of 1.2%. This was also pretty close to March’s figure of 5.4%. This indicates that demand for Japanese machinery is picking up.
GDP growth figures and inflation data also brought some goods news. The final GDP report did not print a downward revision in growth figures, as the Japanese economy posted expansion of 1.2%. It was expected that the report would should a downward revision to 1.1%.
Meanwhile, both the consumer goods price index and the GDP price index showed some positive figures about inflation. The CGPI report indicated that consumer prices are up by 0.4% from levels a year ago, while latter report printed a decline in prices of just 2.8%, slightly better than expectations of a 3.0% mark. Any rise in prices of Japanese goods is a positive sign, as deflation remains one of the biggest headaches for Japan right now.
No major news coming out for Japan today, but be on the lookout for interest rate statements from the UK and euro zone today. These might just prove to be the catalysts that push yen pairs out of their comfort zones.
Hurt by the rally in equity markets across the globe, the yen ended the US trading session with a huge hit against all major currencies yesterday. Special mention goes to the GBPJPY, as it rallied more than 200 pips from its Asian session open.
From the looks of it, the run is risk appetite came mostly from better-than-expected figures on China’s trade balance report. It showed that the country’s exports in May surged almost 49%, which the biggest rise seen since 2004.
Japan’s economic cupboard will be empty again today so the yen’s price action will be mostly driven by news coming out of other major economies. Also keep an eye out for the 200 SMA’s on both the Dow and the S&P 500. If these indices manage to rise above their respective 200 SMA’s, we could see the yen get sold-off across the board.
The USDJPY paced back and forth inside a range last Friday as traders pondered the effects of Japanese Prime Minister Naoto Kan’s big plans for Japan. Will his “drastic reform” also have a dramatic effect on the yen?
According to Kan, the government needs to attend to Japan’s swelling debt immediately. With that said, it looks like Japan would be in for some austerity programs but this would run contrary to the Democratic Party of Japan’s plans to spur domestic economic activity. I’m not sure how they’d be able to pull that off but it’d be interesting to see how they reduce and increase spending at the same time! Aside from that, Kan also announced that the government plans to take aggressive steps in attacking Japan’s persistent problem of deflation.
On the economic front, Japan’s recently released BSI manufacturing index saw a huge improvement. The index for the second quarter of 2010 jumped from 4.3 to 10.0, implying that manufacturers are much more optimistic about current and future economic conditions.
Will the BOJ share the same upbeat economic outlook as Japanese manufacturers? Find out upon the release of their monetary policy statement on Tuesday. Although the central bank is expected to keep rates at 0.1%, positive remarks from policymakers could help lift the yen’s spirits. Also due Tuesday is the tertiary industry activity index, which could show that the services sector rebounded by 2.5% in April after contracting by 3.0% in March.
No other economic figures are due for the rest of the week but stay tuned for the release of the BOJ monthly report on Wednesday and the monetary policy meeting minutes on Thursday. These reports usually contain the central bank’s assessment of economic conditions as well as their estimates for growth and inflation.
After stumbling out of the blocks, the yen was able to recuperate, posting manageable losses versus higher yielding currencies. News that Greece got downgraded by another ratings agency helped spur some risk aversion, which of course, helped the yen. After making an intraday high at 112.87, the EURJPY only managed to finish at 111.81.
Today, the Bank of Japan will be releasing its monetary policy statement. Now, nobody expects a change in interest rates, but I’m curious to see what comments could be made, especially since we’ve got a new government in place. As I said yesterday, new Prime Minister Kan has said that the government wants to take aggressive measures to help fight off deflation. It’ll be interesting to see if he tries to pressure the BOJ to help him do this.
Keep an eye out also for the tertiary industry activity index due at 11:50 pm GMT. Early estimates are calling for a rise of 2.5% in activity of service companies last April, a nice improvement from the 3.0% drop posted for March. After yesterday’s report that the manufacturing sector is improving, can we expect a nice surprise from the services sector?
The yen traded in an almost perfect V-shaped manner yesterday. After rallying sharply during the Asian trading session, the currency completely reversed its gains and even ended with a loss when risk appetite came crashing back down on the markets.
As widely expected, the [Bank of Japan](http://www.babypips.com/forexpedia/BOJ) (BOJ) announced once again that it decided to keep interest rates steady at 0.10%. In addition to this, the bank also said that Japan’s recovery was at a “moderate” pace, which was brought about mostly by improvements in the global economic environment.
For today, await the release of the BOJ’s monthly assessment. Set to come out 5:00 am GMT, the report will outline the reasons for the bank’s latest interest rate decision. Although the report probably won’t create much of an impact on the yen’s price action, it will provide an inside look as to where the BOJ thinks Japan’s economy is heading.
The USDJPY hovered above the 91.00 handle and spiked to a high of 91.83 when the London session kicked off. From then, the yen started to surge, pushing the pair back down to the 91.10 mark.
Even though Japan didn’t release any economic figures yesterday, the slightly upbeat BOJ monthly report managed to reassure yen traders that Japan could weather the effects of the European debt crisis. The report also shed more light on the central bank’s new loan scheme, which many speculated to be a rehashed form of quantitative easing. But, as Forex Gump pointed out in his latest entry, this loan scheme could bring good tidings for Japan if the BOJ allocates funds properly.
No economic figures are due from Japan today but be on the lookout for the release of the minutes from the BOJ’s latest monetary policy meeting, which could contain more details about their new loan scheme. Stay tuned for that at 11:50 pm GMT.
The USDJPY attempted to break through the 91.00 handle yesterday, but failed to close below the 200 SMA. Against other majors, the yen largely stuck within range. Will consolidation continue to be this summer’s trend?
No new details emerged from the release of the minutes of the latest BOJ monetary policy meeting. With no major data coming out today, we could see more range like trading for yen pairs. Be careful though, as traders may decide to lock in profits after the sudden rise in higher yielding currencies throughout the week. If this happens, we may see the yen benefit slightly.
With hardly anything on Japan’s economic cupboard, the yen tiptoed sideways slowly against most major currencies last Friday.
Earlier today, however, the yen was able to gap up against the dollar on the news that China will be increasing the yuan’s flexibility in terms of exchange rates. Remember, China has pegged to the yuan to the value of the dollar to allow its exports to remain competitive no matter the market conditions.
China’s currency has always been considered to be artificially low, so increasing exchange rate flexibility could lead to an appreciation in the yuan’s value relative to the dollar. If this happens, the purchasing power of Chinese would increase and boost internal demand.
So how does this affect the yen? Well, since China is one of Japan’s major importers, increased demand from the Chinese could also boost the Japanese economy.
Up ahead, I see no red flags on Japan’s economic calendar, so keep an ear open for any new developments on this “yuan flexibility.” If China continues to make announcements with regards to exchange rate leniency, we could see more gains for the yen!
The yen lost ground against most of its counterparts after the freshly released all industries activity index fell short of expectations. Because of that, the USDJPY was able to rally by more than a hundred pips from its opening price of 90.45.
Based on the all industries activity index, the total value of goods and services purchased by businesses climbed by only 1.8% in April. This was less than the projected 2.1% increase for the month. Still, it marked a rebound over the 0.7% decline seen last March and the 2.3% drop in February, showing that Japan’s economy is licking some of its earlier wounds.
No economic figures are due from Japan but be on the lookout for any updates on Japan’s deficit. Credit rating agency Fitch mentioned that Japan would be under the microscope for the next couple of months as they assess the nation’s debt situation. Any comments suggesting a sovereign debt downgrade could drive the yen lower.
Sniffff… Is that a new air freshener we’ve got in the markets? It smells like the risk aversion scent to me! After all, the yen was able to dominate its higher yielding counterparts in yesterday’s trading sessions!
Poor data from the US housing market sparked another round of risk aversion, which helped the yen rally. Remember, whenever traders become scared, they start unwinding their positions in risky assets. Because the yen is the most favored funding source because of its low interest rate, it is used to fund these positions. So whenever traders decide to chill out, they have to cover their short yen positions, which is why the yen rallies whenever risk aversion takes place.
At 6:30 am GMT, Bank of Japan Governor Masaaki Shirakawa will be speaking at the annual meeting of Credit Cooperatives. He may just drop some comments about potential moves that the BOJ might make in the future.
Trade balance data will also be available at 11:50 pm GMT. The report is expected to print a surplus of 730 billion JPY for the month of May. This would indicate that more goods were exported than imported. A higher than expected figure would be good for the Japanese economy, as Japan is heavily export dependent. Still, I’m not too sure how much of an effect this will have on yen trading. If you ask me, it’s all about risk sentiment baby!
Although performing slightly better than the Greenback, the yen still found itself trading lower against most major currencies yesterday. It posted losses versus the euro, the pound, and the Aussie.
Earlier today, the yen was sold-off on disappointing trade figures. According to a trade report, Japan’s exports slowed significantly in May and caused its trade surplus to fall to 420 billion from 510 billion JPY (revised down from 710 billion JPY) in April.
Up ahead, expect to see Japan’s consumer price index at 11:50 pm GMT. It is expected to show that prices in the nation’s capital, Tokyo, have fallen 1.3% year-on-year, indicating that the country is still in deflation mode.
The Japanese yen popped a bottle of sake yesterday and toasted to its gains against its counterparts. Better than expected inflation figures from Japan gave the yen a good reason to celebrate.
The Tokyo core CPI and Japan’s national core CPI printed 1.3% and 1.2% declines respectively, beating expectations and previous results. These smaller than expected price level dips gave traders hope that Japan could start crawling out of the deflationary rut. I bet yen bulls are crossing their fingers that Japan could snap out of deflation soon!
The yen could be in for some lazy movement today since it must be pretty groggy from downing all that sake yesterday. Kidding! No economic figures are due from Japan today and there aren’t any high-impact reports due from other major economies.
It was a great week for the yen, as it was able to post gains versus the euro and dollar throughout the week. This tells me that risk aversion is still playing a role in the forex markets. Could this continue as we approach the last week of the first half of the year?
Now that the yen has been posting some pretty good gains the past couple of weeks, when will the Bank of Japan hit the markets with some verbal intervention? The ninjas…err, officials… at the BOJ have said time and again that they prefer a weaker yen, as a strong yen could fuel more deflationary pressures. A cheaper currency also helps their exports, as it would effectively make them more affordable compared to goods from other countries. If we see the yen continue its good run, look for the BOJ to throw some ninja-star jabs to help limit it’s rise.
Yesterday, retails sales data was released and failed to hit expectations. Sales rose just 2.8% on a yearly basis, which was much less than consensus of a 4.7% rise. This was the first time in four months that sales didn’t beat the previous month’s growth.
More consumer spending data will be available later today, when household spending figures come in at 11:30 pm GMT. Household consumption reportedly grew by 0.4% during the month of May. Seeing as how retail sales came in worse than expected, can we expect the same from today’s report?
Yen trading was as mixed as a bag of nuts yesterday. While it was able to post some gains against the euro and the Aussie, it lost out versus the pound. As opposed to the dollar, well, the yen ended the day barely changed!
It seems that traders are sitting on the sidelines in anticipation of the upcoming US employment report on Friday… We’re going to have to grit our teeth and prepared ourselves for the directionless movement in the next couple of days….
In any case, let’s take a take a look on what’s happening on the economic scene. Earlier this morning, Japan released some depressing reports. The report on household spending showed that consumer activity, instead of increasing in May like initially expected, fell by 0.7%. Companies also took a step back, as the industrial production report fell by 0.1%, opposite the 0.1% rise predicted.
With the highly anticipated US employment report on Friday and the absence of high-profile economic data from Japan, we will probably see the yen move mainly sideways today.
Bleaker than expected economic figures from Japan seemed unable to stop the Yen from partying yesterday. Thanks to risk aversion, the Yen scored a bunch of pips against its counterparts as traders started to unwind their riskier positions.
Japan’s manufacturing PMI showed a slight dip in the industry’s expansion as the index fell from 54.7 to 53.9 in June. Components of the indicator revealed that orders for new exports fell for the second consecutive month while manufacturing output marked its first drop in three months. Even though these caused the manufacturing PMI to cap off its five-month winning streak, the index still remains above the 50.0 mark and close to its four-year high, suggesting that the industry’s prospects are still healthy.
For today, Japan is set to release the results of its Tankan survey for the second quarter of the year. The Tankan manufacturing index is expected to climb from -14 to -3 while the non-manufacturing index is projected to rise from -14 to -8, reflecting strong improvements in those industries. Many traders are looking out for this report so you better stay tuned for the release at 11:50 pm GMT.
A day after dominating the markets, the yen took a breather yesterday, as it didn’t push hard against the dollar and the euro. As Big Pippin pointed out on his chart art today, USDJPY is now approaching key levels. Will the yen continue to dominate? Or is it time to let go of some gains?
Japan got some good news yesterday, as the Tankan surveys came in much better than expected. The Tankan non-manufacturing index had a score of -5, slightly higher than the -8 forecast. The real surprise though, came from the manufacturing index, which posted a figure of 1, better than consensus of -3. This indicates improving conditions in the Japanese economy. Woohoo! Sushi and sake for everyone!
Let me point out though, as Forex Gump predicted in his blog, the results of the Tankan reports barely moved the market. This indicates to me that it is still risk sentiment that is driving the markets. With the week coming to an end soon, let’s see if risk aversion remains the key central theme. If traders decide to keep unloading on their risky assets, look for another yen rally to end the week with a bang!
When optimism in the global economy hits the market, what usually happens? That’s right, the yen falls across the board…. Yesterday was no different, as the yen gave up some ground against the pound, the euro and the Aussie.
The yen’s demise mainly rooted from the news that Spain and France successfully managed to auction off their government bonds. With the healthy demand for government debt, the fears of sovereign risk have finally calmed, and confidence was restored in the euro zone. Unfortunately, this newfound optimism turned out to be yen-negative.
No major data coming out of Japan today, but this doesn’t mean that we won’t be seeing some fireworks. Up ahead, the mother lode of economic reports, the US non-farm payrolls, will be released. This report garners a lot of attention from traders and could serve as a catalyst for a sentiment shift. Price action could get crazy if results don’t come in as expected, so keep it tight folks!