Friday was another day of disappointment for the yen bulls as the JPY incurred a broad-based loss against all the other majors. Will the JPY be able to stage a rally this week? Stay tune.
Japan’s all industries index dropped more-than-expected by 2.3% in February, suggesting that business activity in Japan had become more stagnant than the economists’ estimate. It was only projected to dip by 1.5% during. January’s figure was also negatively revised to 3.4% from 3.8%.
The yen continued to drop when news that Greece asked $55 billion from the IMF and the other EU-member nations to finance part of their dues upped the investors’ confidence in the market, leading them to sell the safer currencies like the yen.
This week will start for Japan with the release of its retail sales data on Tuesday. The gain in Japan’s year-over-year retail sales in March was anticipated to have slowed to 3.7% from 4.2% due to the 0.6% monthly dip that it had during the month.
On Thursday, Japan will issue a bunch of economic data which includes the household spending account, Tokyo and national core CPIs, unemployment rate, and average cash earnings. Despite the projected 0.2% drop in average cash earnings, household spending is still seen to have increased by 0.7% on a yearly basis. Meanwhile, the country’s Tokyo core CPI in April is estimated to be at -2.0% from -1.8%, indicating that the country’s deflation is worsening. The national core CPI, however, likely remained at -1.2% in March. On a separate note, Japan’s unemployment rate probably stayed at 4.9% as well in March.
So among the aforementioned data, the only positive one is the country’s industrial production since it will possibly print a 0.7% advance last month following a 0.6% contraction in the previous period. The result, by the way, will be reported on Friday.
Later that day, the Bank of Japan will also make their interest rate decision. Given the overall drop in general prices in Japan, the BOJ will most likely keep its interest rate unchanged at 0.10%. Keeping the interest rate low, though, would be bearish for the yen.