Daily Economic Commentary: Japan

And just when every one thought the yen was about to rally against the dollar, it choked! USD/JPY pared its losses on Thursday when it ended Friday’s trading at its 7-month high, 108 pips above its opening price, at 81.01.

The pick up in risk appetite following Greece’s official announcement to replace old bonds for new ones made investors ignore the yen and seek higher-yielding currencies. Heck, it seems like news about Japan dodging a credit downgrade was not enough to get the yen any lovin’ either. On Friday, the renowned credit ratings agency announced that it won’t strip the country of its Aa3 rating. (Or at least, not yet.)

I wonder if the retail sales report for January will be able to boost the currency in today’s trading. Due at 11:50 pm GMT, the report is expected to show a 0.2% decline in consumer spending for the month.

If you’re planning to trade the yen, you may want to keep your fingers crossed for a better-than-expected figure as it could be bullish for the currency. Good luck!

Is the yen’s suffering finally over? After losing many consecutive days, the yen was able to show some strength in yesterday’s trading session. Thanks to a slight case of risk aversion, the yen was able to stage magnificent rallies versus other major currencies such as the dollar, the euro, and the pound.

Earlier today, the yen’s rally was extended even further when Japan’s retail sales report came in better than expected. It showed a 1.9% rise in sales, opposite the 0.2% decline initially expected.

The only important report left scheduled for release in Japan is the Preliminary Industrial Production report. It is slated to publish a 1.6% gain, which is a little over half the increase seen the month before. The actual figure will come out at 11:50 pm GMT.

With risk appetite holding strongly yesterday, the yen took a small hit against its European counterparts. EUR/JPY rose 42 pips to finish at 108.35, while GBP/JPY erased its losses from Monday to end at 1.5897, up 79 pips on the day.

Earlier today, preliminary industrial production data was released and showed that production picked up by 2.0%, slightly higher than the projected 1.6% increase. Still, this didn’t affect the yen too much.

Risk sentiment is the name of the game right now and with equity markets holding strongly, the yen has been stuck in the loser’s corner.

Not that the Bank of Japan minds though! The central bank is doing all it can – threatening to intervene, praying, sacrificing goats – to prevent the yen from rising. So any time you see the yen slide down the charts, you can bet that BOJ officials are probably having a shot of sake to celebrate!

We could be in for a big day today, as a ton of data will be released from the U.S. while we’ve got some event risk in Europe in the form of the ECB’s LTRO operations. If you like trading them cross-currency pairs, make sure you take a look at Cyclopip’s Weekly Watch for some levels that may draw some attention later today!

The surprisingly positive data from the U.S. turned to be extremely negative for the yen yesterday. The currency was smashed by the safe haven dollar. USD/JPY ended the day at 81.29, which was 82 pips higher from its opening price during the Asian trading session.

No major news report was released in Japan yesterday, and today will be another uneventful one. This means that the yen will most likely be moved by news reports elsewhere, particularly those from the U.S. That being said, keep a close watch on the results of the weekly unemployment claims and the ISM Manufacturing PMI later. Better-than-expected results could push USD/JPY higher again.

It was a day of recovery for the yen, which was able to pare off some off its losses to the dollar from earlier this week. USD/JPY traded lower yesterday and finished at 81.11, down 18 pips from its opening price on the day.

Yesterday, a report showed that capital expenditure rose by an impressive 7.6% in the last quarter. This was the complete opposite from the expected 6.4% decline, and a nice improvement from the third quarter’s 9.8% decline. This also marked the first time since last year’s earthquake and tsunami that capital spending posted a positive increase. Perhaps this is a sign that Japanese companies are now back on track and ready pump in money towards the rebuilding process!

Earlier today, we got some inflation data in the form of the Tokyo core CPI report. The consumer price index showed that prices fell by 0.3%, which was slightly better than the anticipated 0.4% decline. Take note that Japan is one country that suffers from deflation, so whenever prices increase (or decline at a slower rate), it’s taken as a positive sign.

No major reports on our forex calendar for the rest of the day, so I suspect we could see some tight and choppy trading. Just be sure to have those stop losses in place if you plan on trading yen crosses! Good luck!

Dang it! It looks like not even positive inflation reports could bring the yen’s swagger back. On Friday, it scored losses against both the euro and the dollar. EUR/JPY ended the day 9 pips above its opening price at 108.01. Meanwhile, the yen gave up 69 pips to the dollar as USD/JPY closed at 81.80.

It was reported that Tokyo’s core CPI for February only fell by 0.3%, not as much as the 0.4% decline that analysts predicted. Meanwhile, the national core CPI came in at -0.1% and topped the -0.2% forecast.

But I guess the negative household spending and unemployment rate reports also took their toll on the yen. Not to mention, the BOJ’s ultra loose monetary policy still gave investors enough reason to be wary of buying the currency.

Household spending dropped by 2.3% in January, more than the 0.7% contraction that markets anticipated. The unemployment rate also trickled higher to 4.6% in January from 4.5%.

Our forex calendar is blank for reports from Japan today. This probably means that we’ll see market sentiment continue to dictate the yen’s price action. So be on your toes! If risk aversion kicks in, we may just see the yen pare its losses!

The yen is back in the game, baby! Thanks to profit-taking ahead of major economic reports and a lower GDP forecast from China, the yen once again flexed its muscles in the charts. USD/JPY dropped to an intraday low of 81.15 before capping the day at 33 pips lower than its open price, while EUR/JPY also slipped by 20 pips to 107.73.

No economic report was released from the Land Down Under yesterday, but the surprising news of China lowering its growth forecasts as well as positioning ahead of Greece’s major news events drove investors to buy the low-yielding yen.

Will the yen’s strength this week reach levels where Japan’s officials would be concerned? Remember, the Japanese economy is already struggling with high oil prices and weakening global demand for its exports, so a higher currency might cause headaches to the officials as it would make Japanese products more expensive in the global scene.

Only the average earnings report at 1:30 am GMT is scheduled for release today, but I hear that the RBA is set to release its interest rate statement. Make sure you’re glued to the tube as surprisingly dovish remarks from the central bank could drive Asian session traders to the yen!

Way to go, yen! Thanks to risk appetite, the Japanese yen was able to snatch some gains from its major counterparts, including the safe-haven U.S. dollar, as concerns about Greece’s debt swaps dominated the news yesterday. USD/JPY slipped below the 81.00 handle and closed at 80.85 while EUR/JPY dipped to a low of 105.65.

Japan’s annual average cash earnings data came in better than expected for January as it stayed flat during the month instead of declining by 0.3%. Although this report probably gave the yen some support, it wasn’t the main reason for the yen’s stellar climb yesterday. It turns out that concerns about a potential Greek credit default were revived as the ISDA meeting is taking forever to reach a decision. With that, ongoing uncertainty led traders to seek safety in the lower-yielding currencies like the Japanese yen.

Japan is set to release its leading index at 5:00 am GMT today and show an improvement from a reading of 94.0% in December to 95.1% in January. Later on, at 11:50 pm GMT, Japan will print its final GDP reading for the fourth quarter of 2011 and is expected to show a slight upward revision from the previous estimate of -0.6% to -0.2%. The yen could draw some support if these reports come in better than expected, and possibly get an extra boost if risk aversion stays in the markets today.

It appears that the yen’s losses aren’t over! After its small correction on Tuesday, the yen returned to being sold-off across the board yesterday. The yen lost against most major currencies as it posted a 68-pip loss versus the euro, a 32-pip loss versus the dollar, and a 64-pip loss versus the pound.

It seems that Japan’s stance on currency intervention will continue to be a main theme behind the yen’s price action. For the yen bulls out there, be careful whenever you decide to buy the yen because you think it will rally.

No major news report due today, as only a bunch of low-tier data like the Economy Watchers Sentiment survey and the Preliminary Machine Tool Orders will be published. Both of the reports normally do NOT have an effect on price action so don’t hold your breath for those.

The Japanese yen lost another round to the higher-yielding currencies as traders covered their short positions ahead of the Greek PSI announcement. EUR/JPY managed to close 26 pips above the 108.00 level while GBP/JPY ended 10 pips above the 129.00 mark. Will the yen be able to bounce back today?

Japan’s Economy Watchers sentiment index fell short of expectations for February as the reading landed at 45.9 instead of the consensus at 46.3. Still, this was a bit of an improvement for the January reading of 44.1, suggesting that the respondents are a tad more optimistic about the Japanese economy than they were before.

There aren’t any reports due from Japan today so make sure you keep close tabs on risk sentiment to figure out where the yen could be headed. It seems that traders are still optimistic that Greece will reach its target participation rate of 90% for the private sector bond swaps, but we could be in for a safe-haven rally in case it falls short.

Also, stay tuned for the release of the U.S. NFP figure at 1:30 pm GMT today since it could also be a big market mover. Better than expected data could spark a risk rally, which would be negative for the Japanese yen. Check out what Forex Gump has to say about the February NFP release!

The yen got a taste of both defeat and victory last Friday. It weakened against the dollar as USD/JPY rallied 82 pips to close at 82.42. Meanwhile, it won a consolation victory over the euro as EUR/JPY slipped 17 pips to 108.09.

Except for a few words from my homie Finance Minister Jun Azumi, we didn’t really have much news to work with from Japan last Friday. He said that the central bank’s decision to expand its bond-buying program last month has been helping the economy, but he’s still hoping for further action in the coming months. If Japanese officials can maintain this kind of mindset and manage market expectations, they may have a legit shot at keeping the yen from rising!

In any case, this week, we have a few Japanese reports on deck. The first salvo was fired with the core machinery orders, which showed a 3.4% increase versus the 1.9% expected rise.

Later at 11:50 pm GMT, we’ll continue with tertiary industry activity data, which is expected to reveal a 0.4% increase following the previous month’s 1.4% uptick.

But no doubt, the highlight of the week will be the BOJ monetary policy statement due sometime tomorrow. It could give us critical clues as to what the BOJ plans to do next, so don’t miss it!

Darn, that was so close! Concerns on China’s weak trade data and a possible debt contagion in the euro zone boosted the low-yielding yen against its counterparts early in the day, but the currency wiped out most of its gains during the later trading sessions.

USD/JPY slipped by 27 pips to 82.23, while EUR/JPY ended the day 4 pips higher than its open price after hitting an intraday bottom at 107.51.

Could it be caused by Japan’s economic reports yesterday? The Land of the Rising Sun printed worse-than-expected reports yesterday with household confidence clocking in a 39.5 reading in February when analysts expect the figure at 40.0. The tertiary industry activity report didn’t help either as it showed a 1.7% decline in the month of January. And to think that it was up 1.8% in December!

Let’s see if the BOJ will change the game for the yen today. At 8:00 am GMT the central bank is scheduled to release its interest rate decision. Market geeks are expecting the BOJ to lean towards more monetary easing, but that doesn’t mean that we shouldn’t brace ourselves for surprises! Keep an eye out for this report, will ya?

It seems like the BOJ has finally found the magic formula to weaken the yen! Thanks to the central bank’s dovish monetary policy statement, the yen found itself losing massive pippage against its major counterparts. USD/JPY rose 72 pips to a new 11-month high at 82.95 while EUR/JPY climbed 35 pips to 108.53.

It looks like the BOJ was serious about its promise of loose monetary policy! Yesterday, it announced that it will be expanding its loan scheme for high-growth industries from 3.5 trillion JPY to 5.5 trillion JPY. To help with its goal of promoting growth and overcoming deflation, it also plans to offer loans in foreign currencies to Japanese companies.

From the looks of it, the BOJ may even have more easing up ahead. Doing a bit of detective work, I found out that BOJ member Miyao unsuccessfully proposed further easing to the BOJ. If he can get more members to support his call, it may only be a matter of time before the central bank expands its asset purchasing program again!

The only report on tap today is the BOJ monthly report due at 5:00 am GMT. If you wanna see the nitty-gritty details of Japan’s recent economy performance, check it out!

It was another day of losses for the yen, as USD/JPY and the yen crosses continued to climb up the charts. Will the yen’s misery continue today or are we about to see a midweek reversal?

With risk aversion propping up a bit and the recent run of the dollar, the yen has been left in the dust this past week. Of course, this is exactly what Bank of Japan officials want, as they’ve been complaining about the level of the yen for a couple of years now.

In fact, the recent weakness of the yen has even led to Japanese officials upgrading their economic forecasts in the BOJ’s monthly report. Remember, Japan has s a heavily export-dependent economy, and a weaker yen will help stimulate export sales.

No hard data on tap today, but keep an eye out during the New York session, as we’ve got a ton of data coming out from the U.S. Make sure you check out my U.S. commentary to be in the know!

And its losing streak continues! The Japanese yen gave way to its major counterparts as it lost ground to the higher-yielding currencies for yet another day. Against the safe-haven Greenback, however, the yen managed to sneak in a gain as USD/JPY closed 16 pips down from its 83.73 open price.

Better than expected economic figures from the U.S. seemed to bring risk appetite back in the markets, forcing the lower-yielding yen to bow down to most of its counterparts. With that, the Japanese Ministry of Finance must be really pleased with yen’s continued weakness as it could spur demand for Japanese exports. They did point out though that, once the yen starts to appreciate strongly again, they are ready to respond urgently and appropriately.

In terms of economic reports, the coast is still clear for Japan as its schedule is empty today. Make sure you keep close tabs on market sentiment to figure out where the yen could be headed!

The yen was the sumo sized loser last week, as higher yielding currencies kept bumping it out of the trading ring. Can the yen make a comeback or is it in for more losses this week?

USD/JPY is now several hundred pips off its lows, which is exactly what the Bank of Japan wants. Hopefully, the yen’s depreciation will help its export industries and help Japan get back on track!

No biggies on the rotating sushi bar this week but as usual, keep an eye out on risk sentiment, as you never know when it’ll shift in one direction or the other!

Although the yen suffered more losses to the euro, giving up 44 pips in yesterday’s trading, it was still able to post another win against the dollar. USD/JPY ended the day 5 pips below its opening price at 83.35.

Without any economic data on tap from Japan, analysts are saying that a major reason why the yen has been able to extend its wins against the dollar is because of repatriation flows. They’re most probably right. Heck, if I were a Japanese businessman, I would definitely rather repatriate my foreign profits now that USD/JPY is above 83.00 rather than wait for it to drop back down to 76.00!

Keep that in mind when you trade the yen in the next few days, ayt? It may just help you reel in pips given that we don’t really have a lot of economic data due for the currency.

Once again, the yen was dumped like a hot potato as traders continued to ditch the Japanese currency in light of the BOJ’s easy monetary policy. EUR/JPY rose another 37 pips to record a new high at 110.71 while USD/JPY climbed 36 pips to end the day at 83.71. I can already imagine the huge smiles on BOJ members’ faces!

Though Japanese bankers were out on holiday celebrating Vernal Equinox day, the yen still managed to weaken across the boards. Blame it on the BOJ, I say! Ever since the central bank announced that it’ll be maintaining an easy monetary policy, the yen has been weakening like crazy! If only they had adopted such a strategy last year, then maybe they wouldn’t have thrown so much money at direct market interventions, eh?

Anyway, today we’ve got Japanese data on tap in the form of the February trade balance report at 11:50 pm GMT. Forecasts say we should expect the deficit to narrow from 0.61 trillion JPY to just 0.34 trillion JPY. Don’t miss this report because it will give us a good look at how the exports industry has been responding to the yen’s recent price action!

Boy, did the yen hustle some muscle in yesterday’s trading! USD/JPY rallied to tap its intraday high at 84.10 when it suddenly pared all its gains to end the day at 83.41, 30 pips below its opening price.

The yen’s initial weakness was probably caused by negative data from Japan. It was reported that the change in the total value of goods and services bought by businesses contracted by 1.0%. Analysts had only expected the All Industry Activity index to print a more modest contraction of 0.5%.

However, as risk aversion kicked into high gear, demand for the safety of the yen also rose. As I’ve said in my USD commentary, talks about slowing Chinese growth and rising European bond yields have gotten investors worried.

We’ll probably see market sentiment dictate price action today too. So while you keep tabs on the market’s mood when you take trades, be sure that you also keep in mind that the trade balance report for February came in better than expected.

The market consensus was for the trade deficit to come in at 340 billion JPY. However, the actual figure showed that imports outpaced exports only by 310 billion JPY.

Because of the market’s aversion to risk, the yen was the only major currency that was able to stand up to the Greenback’s strength yesterday. USD/JPY fell all throughout yesterday’s trading session and closed at 82.54, its lowest level in 7 days.

The only report released yesterday was the country’s trade balance. It came in mostly in line with expectations and printed a 310 billion JPY deficit. The forecast was for a 340 billion JPY deficit.

No major news event scheduled to happen in Japan today so expect the yen to be moved primarily by risk sentiment. If the market’s aversion to risk persist, we could see the yen continue to gain ground today.