Daily Economic Commentary: Japan

The yen’s price action yesterday was as mixed as Robopip’s multi-colored buttons as the lack of reports from Japan made the yen vulnerable to speculations. USD/JPY flirted closer to the major technical support level at 76.00, but EUR/JPY inched 35 pips higher at 105.94.

No news report was released from Japan yesterday, so the low-yielding yen largely traded on dollar sentiment and risk appetite. The big story in the yen is its strength against the dollar, which has been pushing USD/JPY closer and closer below the major 76.00 mark.

If you take a look at your charts, you’ll see that the level has served as a strong support for the pair for the past couple of weeks. This is what’s making many technical traders believe that the BOJ or Japan’s Ministry of Finance (MoF) will launch another currency intervention in the near future.

Will USD/JPY’s price action today be enough to put the currency intervention theories to the test? Only the CSPI (Corporate Services Price Index) report at 11:50 pm GMT is scheduled for release in Japan today, so the yen will most likely trade on risk sentiment again.

Make sure you watch your trades closely!

Thanks to the surge in risk aversion, the Japanese yen was able to outpace its major counterparts yesterday. EUR/JPY closed 33 pips down from its 105.94 open price while GBP/JPY ended at 121.49. USD/JPY even fell to a new low of 75.74, fueling rumors that the BOJ will intervene in the currency market. Will this happen anytime soon?

As my buddy Forex Gump pointed out, USD/JPY is already beyond its post-war lows and many traders are speculating that the central bank will stage another currency intervention sooner or later. He pointed out that, even though the Japanese government has the “Strong Yen Plan”, they emphasized that BOJ intervention is still an option if the yen refuses to back down. With that, better stay on your toes when trading these yen pairs!

Japan isn’t set to release any top-tier economic data today, leaving yen pairs at the mercy of risk sentiment. Recall that further delays in the EU Finance Ministers summit, along with weak economic figures from the U.S., forced traders to flee to the safe-havens yesterday. If we see more disappointing news today, the Japanese yen could continue to benefit from risk aversion.

The yen received a beating across the board yesterday due to market optimism on the results of the EU summit. EUR/JPY, which traders consider as a good barometer of risk appetite, is currently trading at 106.30, more than 150 pips higher from its lowest level yesterday.

Today will be a big day for Japan since the Bank of Japan (BOJ) is scheduled to announce their decision on interest rates. The market widely expects no change on interest rates so pay attention to the accompanying statement instead for the yen’s direction. Currency intervention talks could push the yen lower.

Also keep an eye out for the results of Japanese inflation and industrial production data. At 11:30 pm GMT, the country’s CPI report will be released. The national CPI is expected to show a 0.2% gain while the Tokyo CPI is predicted to print a 0.4% decrease. On the other hand, the industrial production report, which will be released at the same time, is slated to show a 2.0% decline.

Boo hoo! The Japanese yen got clobbered by its higher-yielding counterparts as risk appetite surged yesterday. Its only win was against the safe-haven U.S. dollar as USD/JPY closed 4 pips below the 76.00 handle. Read on to find out whether the yen could get back on its feet today or not.

The announcement of the euro zone debt deal, along with strong economic figures from the U.S., brought risk appetite back in the markets yesterday and led traders to dump the lower-yielding Japanese yen. It didn’t help that Japan was off to a poor start as they released weaker than expected retail sales data during the Asian session. The report showed that consumer spending dipped by an annualized 1.2% in September instead of staying flat. Now that can’t be good, considering retail sales already slipped by 2.6% year-over-year during the previous month!

That was probably why the BOJ decided to keep interest rates at their current low levels during their monetary policy decision. They even decided to add 5 trillion JPY to their asset purchase program in order to boost the Japanese economy. However, this was actually a disappointment for some market participants since they expected more aggressive action from the central bank. Some were even counting on a currency intervention since USD/JPY is lingering at its post-war lows.

The BOJ also downgraded their growth forecasts as they now expect the Japanese economy to expand by only 2.2% in 2012 versus the previous forecast of 2.9%. This year, they’re expecting a mere 0.3% GDP growth instead of the original forecast of 0.4%. Inflation expectations were also lowered to account for the negative effects of the rising yen on their domestic economy.

Fresh off the press are the household spending, CPI, and industrial production data. The September household spending report chalked up a smaller than expected decline of 1.9% year-over-year versus the consensus of a 3.4% dip. This was also much better compared to the 4.1% slide seen in August. Another notable improvement was the drop in joblessness from 4.5% to 4.3% in September.

However, the Japanese industrial production report came in worse than expected and showed a 4.0% drop, double the projected 2.0% decline for September. These mixed data could dull the yen’s shine again today, but watch out for any shifts in risk sentiment to know whether the safe-havens or higher-yielders would end the day with a win.

Aaah, it looks like the yen had a good day last Friday ending the day higher against most of its counterparts as risk appetite waned on skepticism about the EZ debt plan. EUR/JPY closed 47 pips lower at 107.25 while USD/JPY ended the day 19 pips below its opening price at 75.75.

But alas, good things do come to an end. Earlier in the Tokyo trading session, yen pairs skyrocketed up the charts with USD/JPY shooting up to 79.51 from 75.57. Finally, the BOJ put its foot down and kept the yen from getting any stronger.

I have a feeling traders will be wary of buying the yen today following the intervention. So be careful too, ayt? Be on your toes for updates from the BOJ!

Finally!!! After days of “talking the talk” (a.k.a. jawboning), the Bank of Japan finally “walked the walk” and acted to weaken the Japanese yen. As a result, USD/JPY saw a 253-pip gain and closed at 78.17, while EUR/JPY finished 136 pips higher at 108.33 after topping out at 111.59.

Midway through the Tokyo session, the BOJ finally stepped in to sell and weaken the yen. As you all know, the yen had been enjoying a big rally prior to the BOJ’s intervention. The question now is, will it work this time or will the intervention flop again?

Solo interventions haven’t been successful in the past, so there’s a very real chance that the yen may find itself back up the charts again. That being the case, I would continue to keep an eye out for further BOJ activity as it may have more interventions up its sleeve! After all, it will need to get aggressive if it wants to spook traders from buying the yen and show them it means business.

Thank you, risk aversion! After taking a big hit on Tuesday, the Japanese yen hopped on over to the winners’ side of the fence as it gained ground against higher-yielding currencies. Though it ended weaker against the dollar, with USD/JPY rising another 21 pips on the day, it rose 93 pips against the euro and 75 pips versus the pound.

How fickle these traders are! After ditching the yen following the BOJ’s intervention on Monday, traders quickly came rushing back to buy up the safe haven currency as risk aversion struck the markets. It looks like the yen hasn’t lost its safe haven appeal yet after all!

On another note, the minutes of the most recent monetary policy meeting seemed surprisingly optimistic. Members of the central bank noted improvements in production, exports, consumer spending, housing investment, and even in the ailing job market! I daresay, it seems like Japan is showing signs of recovery!

Meanwhile, Japan’s average cash earnings were unchanged last month, putting a halt to its recent decline. Could this mean that wages will finally stabilize in the Land of the Rising Sun?

In any case, we’ll have to ponder on that some more as we won’t have any new economic reports coming out from Japan today. For now, I suggest you all continue monitoring risk sentiment. Remember, if risk sentiment turns sour, expect the yen to show its power!

So much for intervention! While USD/JPY has remained steady above 78.00, EUR/JPY and GBP/JPY are right back to where they were before the BOJ intervened in the markets! What gives?

With risk aversion still weighing down higher yielding currencies, the yen advanced versus most of its counterparts. This just goes to show that even with the threat of intervention, the yen can still gain in times of uncertainty.

With yen crosses falling across the charts, we may just see the Bank of Japan stick its head back into the markets for another round of yen selling. For those of you who like trading the yen crosses, be careful out there and always practice good risk management techniques!

The Japanese yen’s performance was as mixed as a bag of nuts as it lost to the Greenback and the euro but gained against the pound. USD/JPY struggled to hold on to the 78.00 handle as it dipped to 77.89 before closing at 78.06. EUR/JPY closed 60 pips up from its 107.30 open price while GBP/JPY ended 7 pips below the 125.00 mark.

Japan didn’t release any economic reports yesterday since it banks were closed in observance of Culture Day in their country. Despite the lack of data, the Japanese yen was able to make some wild moves across the charts as risk sentiment shifted around. Still, traders seemed reluctant to put their money in the yen as they worried that another currency intervention could take place.

There aren’t any economic reports due from Japan for the next 24 hours so be mindful of the swings in risk sentiment if you’re trading the yen pairs. Bear in mind that the U.S. is set to release its NFP figure today and this report is notorious for setting off fireworks in the forex market. Stay on your toes!

So far so good! Despite the release of the NFP report from the U.S. and the G20 meetings making waves in the markets, the yen managed to hang on to most of its losses from the BOJ intervention early in the week. USD/JPY is still above the 78.00 handle, while EUR/JPY capped the day at its open price.

Does this mean that the BOJ should pat itself on the back and call it a good week? Heck no! A lot of high-impact reports from the other major economies are due for release this week, not to mention the potential impact of speeches that the EU and the U.S. leaders are scheduled to give over the next couple of days. The yen could still dramatically rise if risk aversion suddenly spikes up!

For Japan though, only the leading indicators at 5:00 am GMT is scheduled for release. The data is expected to clock in at 96.3% in September after showing a 103.8% figure in August, but keep your eyes peeled for any surprises!

Banzai! Yen bulls ended the day piptorious against their major counterparts. USD/JPY ended the day 13 pips below its opening price at 78.06 while EUR/JPY closed at 107.56 after starting the day at 107.85.

It looks like the pullback in risk appetite caused by concerns about political instability in Greece and Italy. With that said, it might be a good idea to keep tabs on market sentiment and listen in on updates from the euro zone given that we don’t have any economic data on tap from Japan today.

Remember, the yen usually rallies in times of risk aversion!

A little bit of this and a little bit of that is what we got from the Japanese yen yesterday. Despite publishing positive current account data, the yen slid against the euro, with EUR/JPY ending at 107.89, 92 pips above its opening price. On the other hand, it gained ground against the dollar as USD/JPY finally broke below 78.00 to finish 36 pips lower at 77.69.

The only news that we got from Japan was an early report saying that Japan’s current account balance increased from 0.65 trillion JPY to 1.19 trillion JPY. However, it seems that this was largely ignored by the markets as it didn’t cause so much as a blip on the charts.

For those of you planning to trade the yen today, keep a close watch on USD/JPY! Things are looking interesting now that it has broken below the 78.00 support area. With the pair still sliding down, you have to start wondering if the BOJ will intervene again. Some say 77.50 could be the next stalling point and that if price breaks below this level, the BOJ may get busy again. In any case, be sure to stay on your toes. The BOJ is full of surprises!

Although the yen wasn’t able to end the day with a win against the dollar, it was still able to get 201 pips from the euro when EUR/JPY ended the day at 105.49. Sweet!

As you probably know now, rising Italian bond yields and weaker-than-expected economic reports from China sparked risk aversion and made investors move their assets to the safety of the dollar and the yen. However, aside from the current market sentiment, I have a feeling that the positive data we saw from Japan helped the yen rally too.

It was reported that Japan account surplus widened in September to 1.19 trillion JPY from 650 billion JPY in August and beat the market’s 960 billion JPY forecast. According to the Economy Watchers, consumer sentiment improved in October from 45.3 to 45.9 but failed to meet the consensus of 46.7.

With that said, make sure you also keep tabs on the reports we have scheduled today. We already saw that core machinery orders declined more than what analysts had estimated. The report printed at -8.2% and disappointed the forecast which was for a more modest contraction of 7.3%. Be sure that you also don’t miss the consumer confidence report for October, eyed at 39.3, due at 5:00 am GMT.

Just remember not to get too excited buying the yen though. Keep in mind that USD/JPY is already at its lows and the BOJ may just make good on its promise to intervene when the yen gets too strong. Be careful!

The yen found itself trading in a mixed manner against other major currencies yesterday. Even though it rose against both the pound and the Greenback, it fell versus the euro. It appears that traders aren’t too sure whether to buy or sell the yen with all this currency intervention talk!

In any case, the market’s mood was able to stabilize yesterday thanks to some good news out of euro zone. According to S&P, France’s debt rating remains at triple A and that the outlook is stable. Meanwhile, despite the unexpected surge in yields the day before, the Italian bond auction yesterday was highly successful, showing that there is still demand for Italian bonds.

Economic data from Japan was disappointing. The household confidence survey printed a reading of 38.6, lower than the 39.3 forecast. Meanwhile, the Core Machinery Orders reported an 8.2% decline, almost a percent lower than forecast. Then, earlier today, the report on Tertiary Industry Activity also came in worse than expected. It showed a 0.7% decline, almost double the 0.4% decrease initially expected.

No more data left on Japan’s economic calendar so pay attention instead to news reports from other major economies like the U.S. and euro zone. Any bad news could trigger another round of risk aversion, which may end up benefiting the yen.

Bank of Japan officials probably let out of a sigh of relief when they saw yen crosses rally a bit to the end the week after dropping on Wednesday. EUR/JPY closed above the 106.00 handle, after testing as low as 104.80, while GBP/JPY finished the week just below 124.00, well off its lows at 123.00.

Still, one thing to keep an eye on is USD/JPY, which is stubbornly crawling down the charts. The pair now just a few pips above the 77.00 handle and continues to creep towards pre-intervention levels. This could very well mean that we could see the Bank of Japan dip their hands into their pot of gold and try to weaken the yen once again.

In other news, preliminary GDP figures were released earlier today, and came in as expected. The Japanese economy grew by 1.5% last quarter, but unfortunately, 2[SUP]nd[/SUP] quarter GDP figures were revised down to show a 0.5% contraction. Could this be a side effect of the strengthening of the yen?

In any case, keep an eye on those yen pairs. Intervention is a real possibility, so make sure you’re prepared!

While the other major currencies suffered due to risk aversion, the yen stayed firm and rallied versus the Greenback. In addition to that, the yen posted gains over high-yielding currencies and risk-related currencies like the euro, the pound, and the Aussie. EUR/JPY, which most traders consider as a good barometer of risk, dropped 137 pips to close the U.S. trading session at 105.06.

There was also a bit of good news from Japan yesterday. The Preliminary GDP reading for the third quarter showed a 1.5% growth, opposite the -0.5% (revised down from -0.3%) from the previous quarter. The industrial production for the month of September was also revised up to -3.3% from -4.0%.

No major news release coming out from Japan today, but I think we’ll still see a lot of action today. There’s quite a bit of red flag events from other major economies which could indirectly have a strong impact on the yen’s price action.

For the second day in a row this week, the yen dominated its major counterparts on a combination of better-than-expected economic data from Japan and a rise in risk aversion in the markets. EUR/JPY capped the day with a 74-pip loss at 104.32, while GBP/JPY also fell by 66 pips to 121.95.

Just before investors turned their attention to the euro zone, Japan released its better-than-expected economic reports yesterday. Japan’s GDP clocked in a 1.5% growth in the third quarter, up from its -0.5% reading in the second quarter. Not only that, even the country’s revised industrial production report surprised to the upside, printing at -3.3% when analysts were pricing in a -3.8% reading.

No economic reports are scheduled for release in the Land of the Rising Sun today, but make sure you stay glued to the tube for any events that might affect risk appetite! Word on the hood is that the BOJ is once again on the watch and ready to intervene in the markets if the yen bulls get too excited!

The yen continued to power through the charts like a boss despite pessimistic comments from the BOJ. USD/JPY ended the day 10 pips below its opening price at 77.00, while EUR/JPY was down 55 pips at the day’s close at 103.77.

In its meeting yesterday, the BOJ kept interest rates unchanged between 0 to 0.1%. However, BOJ Governor Masaaki Shirakawa warned that Japan’s recovery will take a hit as the growth of overseas economies slow and that the euro zone’s sovereign crisis posts a big danger to the economy.

On top of that, the central bank is still pretty concerned about the strong yen hurting the country’s economy-led growth. Although it left its asset purchases target steady at 20 trillion yen, some market junkies think that we would see an increase sometime around December to spur growth.

But because risk aversion is back in vogue, it seems like the negative remarks fell on deaf ears. With that said, be sure to keep tabs on the euro zone. More bad news from the region may just sustain the yen’s rally. Don’t get too excited buying up the currency though. With USD/JPY already trading near its all-time lows, the BOJ might just step in the market and intervene! Be careful, ayt?

With barely economic report coming out of Japan, the yen traded on risk appetite in the markets. As usual, the low-yielding yen gained against most of its high-yielding counterparts with USD/JPY dipping by 5 pips at 76.96, while EUR/JPY capped the day with a 14-pip loss.

Yesterday only the BOJ monthly report was released from Japan. The report echoed the BOJ’s decision to keep its interest rates and asset purchases intact, but it also reported the central bank’s pessimism on the economy’s economic growth.

Speaking of the BOJ, word around the hood is that it’s once again watching USD/JPY closely. If the pair significantly drops in the next couple of sessions, then we might see more jawboning from the central bank!

No economic report is scheduled for release in the Land of the Rising Sun today, so you better keep a close eye on any market-moving news that might change risk sentiment!

Well, you can’t win 'em all, can you? The Japanese yen was able to score gains against the U.S. dollar and the Kiwi last Friday, but ended up losing to the euro and the pound. EUR/JPY closed 4 pips shy of the 104.00 handle while USD/JPY landed 9 pips below the 77.00 mark. Will the yen find a clearer direction today?

Japan didn’t release any economic data last Friday, which could explain the yen’s mixed price action. Just a few hours ago, Japan reported that its October trade deficit widened to 0.46 trillion JPY, more than twice the estimated deficit of 0.2 trillion JPY. To make matters worse, the September figure was revised to show a larger deficit of 0.10 trillion JPY instead of the initially reported 0.02 trillion JPY.

With that, many could blame the persistent yen strength again for dragging down Japan’s export activity. Who knows if the BOJ or Japan’s Ministry of Finance could intervene once more? That’s something we definitely gotta watch out for!

Another thing to watch out for is the release of Japan’s all industries activity index at 4:30 am GMT today. This could show that industry activity slumped by 0.9% in September, following a 0.5% dip last August. A weaker than expected figure could keep yen strength subdued so make sure you keep an eye out for the actual release.

In terms of economic reports, the coast is clear for Japan until Thursday, when the CPI figures will be released. Tokyo core CPI is expected to be down by 0.3% while the national core CPI could print a 0.1% downtick. Be mindful that Japan is still struggling with deflation, which means that weaker than expected inflation figures could be negative for the yen.