The yen bulls came out in force, pushing the yen forward against the euro when news that no concrete plans for a Greek bailout plans emerged in the EU summit. The EURJPY dropped from a high of 124.16 all the way down to 122.05 before settling at 122.78.
No major economic reports are coming out from Japan today, so watch out for shifts in risk sentiment as this has been what’s driving the yen as of late. Watch out for GDP data from the Euro zone today that could prove to be the boom or gloom for risk appetite.
The yen was left confused and, as a result, ended with mixed emotions ahead of the Valentines weekend. Japan’s economic calendar was free last Friday. In other words, it was left dateless. Still, the weak German 4Q GDP number gave the yen a little lift while the optimistic US retail sales accounts kind of sent it ‘guessing.’
Earlier today, Japan’s 4Q GDP was issued. Japan’s economy grew by 4.6% during the last quarter of 2009 due to the robust demand for the country’s exports. The latest reading was far better than the market’s 3.5% projection. The third quarter’s account, however, was revised down to 0.0% from 1.3%. This is perhaps the reason why the latest report barely moved the yen.
On Wednesday, the BOJ will make a decision regarding its overnight interest rate. The bank is widely expected to leave its monetary policies unchanged, keeping its interest rate at 0.10%. The country’s strong 4Q output could prompt the BOJ to start tightening its policies. Though, the significant downside revision in the 3Q’s number effectively nullified this cause.
The yen was a snoozer yesterday as it just traded flat versus the other majors given the lack of economic flows in the major economies. Volatility, however, is expected to pick up today with the release of the UK’s inflation figures and Germany’s Zew economic surveys.
A spike in the UK’s CPI numbers could be bearish for the yen. The expected slide, however, in Germany’s and the euro zone’s economic sentiment due to Greece’s debt problem and Germany’s weak fourth quarter outing, could send the traders back to the safety of the yen.
At 11:50 pm GMT, Japan’s tertiary industry index in December will be reported. The index measures the change in the total value of services purchased by businesses. And since the index is just expected to remain the same at -0.2%, the result would likely have a muted impact on the yen’s short term valuation.
The strong wave of risk appetite blew the yen out of the water yesterday, giving the chance for currency traders to let go of the yen and buy up its western counterparts like the euro, the pound and the US dollar.
Earlier today, the tertiary industry activity report for the month of December failed to meet expectations. It came out with a reading of -0.9%, worse than the -0.2% initially expected. The tertiary industry activity report measures the total change in value of services businesses bought month-on-month. A declining reading is usually seen as negative for the economy because it means that business activity is falling, which could lead to reduced growth.
No data economic data for release today but do watch out for the BOJ’s decision on the country’s interest rates tomorrow. Although the bank is widely expected to keep rates unchanged at 0.10%, we never know how the accompanying statement could affect risk sentiment. An upbeat statement could trigger risk taking and push traders to sell the yen again.
Yowza! The yen took quite a beating against the dollar yesterday, as the dollar made a massive rally across the board. The USDJPY soared to 3 week highs just above the 91.00 price handle.
Any minute now, the latest Bank of Japan MPC statement will be released. While the interest rate is expected to remain at 0.10%, it will be interesting to see what BOJ officials have to say about the value of the yen. Central bank officials have tried in vain to weaken the yen by verbal threats of currency intervention. It may only be a matter of time before they actually back up those words with some action…
The USDJPY raced towards the 92.00 mark during the US session as the greenback emerged as the more favorable safe-haven currency yesterday. In their monetary policy statement yesterday, the BOJ decided to keep rates unchanged at 0.1%.
Aside from that, BOJ policymakers kept mum about further easing measures. This caused plenty to grow uneasy over the central bank’s inactivity in the face of deflationary pressures in their economy. Then again, the BOJ has already used pretty much all the tricks up their sleeve and they could simply be waiting for a more clear-cut sign before implementing additional easing policies.
The all industries activity index is due 4:30 am GMT today and could print a more pronounced 0.3% growth in December. This would be an improvement over November’s measly 0.1% uptick. However, the previously released tertiary industry index, which comprises 60% of the overall industry activity in Japan, printed a disappointing 0.9% slide. Could we see another downside surprise in the all industries activity index? If so, the Yen better brace itself for harder selling pressures!
The yen closed last Friday’s trading in a mixed fashion against the other major currencies. It closed positively over the aussie, kiwi, euro, and pound but fell versus the swissy and the greenback.
Japan’s tertiary industry index, which comprises 60% of the overall industry activity in Japan, unexpectedly slipped by 0.3% in December after posting a gain of 0.2% in the month prior. The result, however, did not have much impact on the yen’s valutation.
On a separate news, BOJ Governor Masaaki Shirakawa urged Japan’s Prime Minister Yukio Hatoyama to contain the country’s fiscal condition. He said that the BOJ cannot just support the government’s fiscal expansion by buying its debt. He continued on by saying that the central bank’s policies are aimed for the economy’s growth and not to support the government’s fiscal expansion .Note that the BOJ is already buying ¥1.8 trillion in government bonds each month while keeping its interest rate at a low of 0.1%.
For this week, Japan’s trade balance for the month of January will be due tomorrow. The country’s trade surplus is expected to have narrowed slightly to ¥0.51 trillion from ¥0.52 trillion. While a drop in the country’s trade surplus is usually bearish for the yen, the account is only projected to have a minimal effect on the yen’s short term movement.
On Thursday, Japan’s inflation, retail sales, and industrial production figures will be due. The country’s CPIs are projected to show that Japan’s is still deep in deflation. The annualized Tokyo CPI is expected to be at -1.9% in February while the annualized national CPI is anticipated to be at -1.3% in January. Preliminary production, on the other hand, is seen to print a 1.1% uptick in January. Despite this, the nation’s retail sales are still seen to have fallen by another 0.1% in the same month.
The projected weak figures above could lead to risk aversion and some yen buying.
The yen received a lot of loving in yesterday’s trading session, gaining against the pound, the euro and the dollar.
Earlier today, the BOJ’s monetary policy meeting minutes for January was released. According to the minutes, most consumers believe prices would probably continue decreasing in the next couple of months. Although this would most likely be the case, the BOJ also said that deflation would tone down eventually. I find this hard to believe, considering how poorly Japan’s labor market has been doing. In fact, the upcoming core CPI expected to print a 1.3% fall in prices, which would mark its tenth month of decline.
For today, watch out for Japan’s trade balance at 11:50 pm GMT. A positive balance is called a surplus, which means that the value of goods exported was greater than the value of goods imported. The trade balance measures the net difference in value between exported and imported goods in a given period. The expectation is that Japan had a ¥510 billion surplus in January, slightly lower than the ¥520 billion surplus seen the month before.
Equity markets fell yesterday as a consumer confidence report from the US came out much worse than expected. With traders running for safety, the yen posted gains against the dollar, euro and pound.
Late yesterday, trade balance figures were released. The data came out slightly better than expected, printing a surplus of ¥ 730 billion, higher than forecasts of ¥ 510 billion. This indicates that exports rose slightly during the month of January.
On Thursday, we’ve got some inflation data coming, as the CPI report are due. As pointed out in Forex Gump’s post yesterday, deflation is at the center of a tense debate between the BOJ and the government. If these figures come in to show that prices fell worse than expected, could it raise concerns of deflation?
After seeing an improvement in Japanese exports earlier on, the yen flexed its muscles and strengthened against the greenback yesterday. Yen crosses, however, were little changed during the day.
Aside from being able to benefit from an improvement in exports, the yen also emerged stronger than the greenback after Fed Chairman Ben Bernanke maintained his cautious outlook for the US economy. No economic reports were released from Japan then.
Today, Japan will release a boatload of economic data, starting with its manufacturing PMI at 11:15 pm GMT. The index dipped from 53.8 to 52.5 in January but it could post a rebound this month, boosting the yen a bit higher. By 11:30 pm GMT, the Tokyo core CPI and Japan core CPI will be released. Both are expected to post declines, highlighting the threat of deflation on the Japanese economy. Then, at 11:50 pm GMT, Japan will release its preliminary industrial production report along with its retail sales data. Industrial production could pick up by 1.1% in January, a bit lower than the 1.9% seen in December. Meanwhile, retail sales are expected to dip by 0.1%. Weaker than expected figures could force the yen to return its recent gains.
It’s as if Japan had won a world war with its broad-based strike against all the other major currency players yesterday. The yen hit it big when the news surrounding Greece’s possible credit downgrade surfaced once again. From that point on, it was the yen all the way.
Japan released a bunch of economic data earlier today. First off was the y/y Tokyo CPI which showed a -1.8% score in February. The latest inflation reading in Tokyo is already an improvement from the previous month’s -2.0% mark and is also better than the -1.9% forecast. The national CPI, on the other hand, remained at -1.3% for the same period.
On separate reports, Japan’s industrial production and retail sales in January also showed some improvements. Industrial production for the month beat the 1.1% forecast with a 2.5% gain. Retail sales likewise trumped the -0.1% estimate with a strong 2.6% growth.
The yen lost a bit of support as the above results got out due to some risk taking in the Japanese market.
No other major economic reports are due in Japan today. Still, you have to watch out for the UK’s and US’s GDP 4Q GDP release. UK’s 4Q GDP is expected to be revised up to 0.2% from 0.1% while the US’s growth for the same period is seen to be a tad lower at 5.6% from 5.7%. Weak economic growth in the UK would probably result to another run of risk aversion, benefiting the yen. In the case of the US, weak or strong number could still be bullish for the yen and dollar. A strong US figure could spark some speculation of a Fed rate hike, favoring the safer currencies – the USD and JPY. A soft number, on the other hand, could cause risk aversion to surface, leading investors back to the safety of the yen and dollar.
After the yen’s convincing rally throughout last week, the currency decided to take a break and ease up on Friday. The yen lost a bit of ground against the euro but was able to post some minor gains versus the dollar and the pound.
There’s a bunch of data coming out of Japan this week but nothing really major to take note of.
In any case, coming out today is the report on consumer spending at 11:30 pm GMT. The expectation is an increase of 2.6% in January, higher than the 2.1% seen in December. Also to be released at the same time is Japan’s report on unemployment. The report is predicted to show that unemployment in the country remained at 5.1%.
While the USDJPY kept within range, the yen was able to post some nice gains versus its European counterparts. The EURJPY and GBPJPY both closed lower at 120.78 and 133.55 respectively.
Late yesterday, consumer spending data was available in the form of the household spending y/y report. The report indicated that spending rose by 1.7% from levels a year ago, down from the 2.1% increase seen in December. Meanwhile, the unemployment report printed some good news, revealing that unemployment is down to 4.9%.
No major data coming out from Japan, but be on the watch out for news coming out from other countries. If risk aversion remains the name of the game, look for the yen to step up to the plate and make some big swings.
The Japanese yen flexed its muscles yesterday as it strengthened against the US dollar and British pound. Apparently yen rallies are not surprising during this time of the year… I wonder why.
Since March is the end of the fiscal year for Japan, Japanese companies usually report their year-end performance then. Aside from being able to benefit from a boost in sentiment, the yen also gained after the IMF announced that the Chinese renminbi is “substantially undervalued” and would need greater exchange rate flexibility. With the yen considered as a substitute for the renminbi, a drastic revaluation of the Chinese currency could pump up demand for the yen.
On today’s economic docket, Japan has its average cash earnings report due at 1:30 pm GMT. It could show that the total value of employment income collected by workers dipped by 1.2% in January. This would be a more moderated decline compared to the 5.9% annualized decline seen in December. Later on, Japan will release its capital spending report at 11:50 pm GMT. The report could print an 18.1% year-over-year decline in the total value of new capital expenditures made by businesses for the fourth quarter.
The Yen was a little fickle yesterday as it settled mixed against the other major currencies. The major economic releases in the UK, euro zone, and the US today, however, could swing the Yen in either direction.
The year-over-year labor cash earnings in Japan have improved to 0.1% in January after incurring a 5.9% loss in December. An increase in cash earnings means more money to spend. However, a 0.1% up is rather insignificant to cause a major shift in the economy and in the yen.
On a separate report, Japan’s annualized capital spending during the fourth quarter of 2009 has declined by 17.3%. While such decrease in spending is considerable, it is still better than the 24.8% slide during the previous quarter. Needless to say, capital spending in Japan remains weak.
No other economic reports are due in the Land of the Rising Sun today. Watch out, however, for the interest rate decision of the BOE and the ECB and the initial jobless claims publication in the US later today. These accounts will surely cause some volatility for the Yen pairs.
No thanks to currency intervention fears, the yen was sold-off against the US dollar in yesterday’s trading session. From the USDJPY’s intraday low of 88.13, the pair soared almost a hundred pips to end the US session just a couple of pips above 89.00.
There was a rumor going around yesterday that the country’s Ministry of Finance raised the budget allotted that could be used for currency intervention, hinting that the MoF is starting to get uneasy with the USDJPY’s current exchange rates levels. A quick look at the charts would reveal that the USDJPY ridiculously close to its lowest level in 14-years, somewhere around the 85.00 handle.
Japan’s economic cupboard for today is empty so be on the look out for data coming out of other nations, most especially the non-farm payrolls from the US.
The yen took a beating following the release of the NFP report, falling across the board. The USDJPY rose back up the 90.50 price area, while the GBJPY shot up over 250 pips from its opening price to end the day at 136.84.
Late yesterday, bank lending and current account data was released. Bank lending is down 1.5% from levels a year ago, indicating that lending conditions are still weak. Meanwhile, the current account report showed a rise in the surplus to ¥1.71 trillion, much higher than the anticipated figure of ¥1.25 trillion.
Not much high impact data coming out from Japan this week except for final GDP figures on Thursday. Still, this might not have much impact on the markets as no revisions are expected from earlier reports that showed a decline of GDP growth of 2.9% in the last quarter.
I’ll be on the lookout for any potential news of currency intervention by the BOJ, and of course, like I do everyday, I’ll keep you posted!
The Japanese yen struggled to stay afloat in yesterday’s trading as it held its ground against the greenback and strengthened against the euro and pound. Although Japan didn’t release any economic figures, reports highlighting the strength in their export industry provided support for the yen.
Recall that Japan’s current account surplus widened from 1.30 trillion JPY to 1.71 trillion JPY in January. This better than expected figure was mostly a result of an improvement in Japan’s exports, which rose at its fastest pace in over two decades. It also marked the industry’s second straight gain as the growth in China, one of its major trade partners, sustained the high demand for Japan’s exports.
Today, Japan will release its leading index at 5:00 am GMT. It could climb from 94.3% to 96.9% in January as the Japanese economy continues to improve. Also due today are Japan’s preliminary machine tool orders and core machinery orders. Watch out for those reports at 11:50 pm GMT.
The Yen closed mixed yesterday against the other major currencies. Trading was a bit flat due to the lack of major economic flows from Japan and the US.
Yesterday, Japan’s leading index for the month of January was released. The index, which was expected to rise to 96.9% from 94.3%, came in better at 97.1%. Its December score was also positively revised to 94.7%. The result, however, did not have much impact on the Yen’s short term valuation.
Earlier today, Japan’s core machinery orders declined by 3.7% in January after posting a stellar 20.1% gain in December. This decline suggests that the previous month’s expansion was perhaps due only to seasonal business cycle and was not sustainable in the long run. Such can also be a sign that capital spending in the coming months may begin to slow.
Later at 11:50 pm GMT, Japan’s final 4Q GDP will be reported. Japan initially posted a 1.1% growth in that quarter but now it is projected to be revised slightly lower 1.0%. Since the GDP is the broadest measure of Japan’s economy, a downward revision here does not normally reflect well on its currency as well.
After the yen’s strong performance last Tuesday, the currency found itself struggling to stay afloat in yesterday’s trading session. The yen fell closed the day lower against the major currencies yesterday, especially versus the euro.
The culprit for the yen’s sharp decline was the rumor going around that the Bank of Japan, urged by the Ministry of Finance, would expand its quantitative easing program to fight deflation.
Quantitative easing is the process of buying financial assets such as government securities and corporate bonds by the BOJ from financial institutions using money magically printed out of nothing. The increase in the money in circulation leads to an increase in lendign amongst banks and businesses, which, in turn, gives them a chance to invest, spend and eventually grow. However, since the supply of money multiplied, it also follows that the value of each unit of money is decreased.
Earlier today, Japan’s final revision for its GDP report during the fourth quarter of 2009 was released. It showed that growth last quarter was only 0.9%, and not 1.1% like initially expected.
No more data on Japan’s cupboard this week so the yen would probably be moved by data coming out of other economies, most especially the US retail sales report and the UoM consumer sentiment survey tomorrow.