What a surprise! The yen turned out to be yesterday’s biggest loser as Japan finance officials decided to finally step in and weaken their currency. The Japanese said that the yen was just too strong already and it could hurt their highly export-dependent economy. USD/JPY ended the U.S. trading session at 79.08, a whopping 210 higher from its opening price that day.
The question right now is whether the currency intervention will actually have a long-term impact on the yen. The yen has been sold-off multiple times by the Japanese in the past but the yen always manages to regain its losses and eventually post new highs versus the dollar.
Japan is in a difficult situation. While the country’s economic growth has been disappointing, it has been overshadowed by the U.S. and euro zone’s poor financial problems. Even if Japan intervenes, it won’t be able to fight the yen’s rise in the long-term by itself.
In other news, the Bank of Japan (BOJ) announced yesterday that they agreed on keeping rates unchanged below 0.10%. They also said that they would make more money available to the financial market by expanding their quantitative easing program by 40 trillion JPY.
Japan’s economic calendar today has nothing important in store for us, but that doesn’t mean we won’t be seeing the yen exhibit movement! In fact, with the U.S. non-farm payrolls coming out at 12:30 pm GMT later, the opposite could happen! Watch the release of the non-farm payrolls folk - it will be the driving force behind the yen’s price action today.
What’s it going to be, yen traders? The yen’s price action was as mixed as Pipcrawler’s sock collection last Friday when risk aversion in markets played tug-o-pips with a bit of profit-taking ahead of the NFP report in the U.S. USD/JPY slipped by 62 pips to 78.48, while EUR/JPY recovered from its lows and clocked in a 39-pip gain at 112.07.
Last Friday the BOJ’s monthly report revealed the BOJ’s optimism in Japan’s capital spending and private spending figures. According to the central bank, the constraints in supply are beginning to recover from its lows after the earthquake in March. The positive report provided fuel for the yen bulls, and pushed the yen higher against the Greenback.
We’ll see if the BOJ will need to stem the yen’s gains further this week. Aside from developments in the U.S. downgrade drama, you might want to watch for Japan’s economy watchers’ sentiment report coming out at 5:00 am GMT today, followed by the BOJ’s meeting minutes at 11:50 pm GMT.
If the BOJ shows more optimism in its latest monetary policy meeting, then we just might see the yen bulls charge and cancel out part of the BOJ’s currency intervention efforts!
Oh yeah! The yen was able to flex its muscles on the charts yesterday as risk aversion highlighted its safe haven rep. It won against all of its major counterparts, gaining the most from the euro and the pound with 183 pips and 130 pips, respectively.
Aside from the bad vibes that came with the U.S. credit rating downgrade and concerns about a debt contagion in Europe, it might have also helped that we heard some good news from Japan yesterday.
The Economy Watchers’ Sentiment index for July beat the 50.3 consensus when it printed at 52.6, indicating that the Japanese are more optimistic about economic conditions. On top of that, it was reported that bank lending for the same month only fell by 0.5% after posting a 0.6% contraction in June.
On the other hand, the current account report for June only showed a 920 billion surplus and fell short of the market’s 960 billion forecast.
Today we also have a few economic reports on tap. Earlier today the minutes of the most recent BOJ MPC minutes were released. But it seems like there weren’t any surprises there.
Later at 5:00 am GMT, we’ll have the household confidence report for July and it is anticipated to print a little higher at 37.6 than the 35.3 reading for June. Then at 6:00 am GMT, the machine tool orders report for July will be on tap and a figure higher than the prior reading of 53.5% will probably be bullish for the yen.
Aside from keeping tabs on these reports, make sure you also get a good feel of the market’s mood, ayt? If risk aversion continues to linger in the markets, the yen will probably continue its rally.
Yen bulls attaaaack! Thanks to dollar aversion and Japan’s better-than-expected economic data, the yen was able to continue its winning streak against its major counterparts. USD/JPY dropped by another 71 pips to 77.00, while GBP/JPY fell to its 125.37 closing price.
If you’ve been checking out Japan’s economic reports yesterday, you’ll know that consumer confidence in the Land of the Rising Sun edged higher in July, which supports beliefs that consumer spending is improving after the earthquake last March. Meanwhile, preliminary machinery tool orders also ticked 34.6% higher in the same month after rising by 53.5% in June.
Of course, traders weren’t just paying attention to Japan’s economic news. Risk aversion in markets gave the low-yielding yen a boost early in the day, which not even a risk-friendly FOMC statement was able to completely erase.
For today keep your eyes on the core machinery orders report coming out at 11:50 pm GMT. Will it be as positive as the reports released a few coffee cups ago? The tertiary industry activity report, or the report that details the total value of services purchased by businesses, clocked in a 1.9% gain in June while the prices of goods sold by corporations also rose by 2.9% in July.
Stick around for the next reports, will ya?
It looks like risk aversion put the “Yeah!” in the yen yesterday as the Japanese currency managed to score gains against the higher-yielding currencies and the U.S. dollar. USD/JPY sank further below the 77.00 support level and closed at 76.83 while EUR/JPY landed 5 pips below the 109.00 mark. Is the Japanese yen in for more gains today?
Resurfacing concerns about the euro zone debt problems and the possibility of a double-dip recession in the U.S. forced traders to flock to the safe-haven arms of the Japanese yen. Perhaps what boosted the yen’s appeal further was the strong economic data we’ve been seeing from Japan lately, proving that the Asian economy has no trouble staying resilient.
Japanese core machinery orders reportedly jumped by 7.7% in June, surpassing the forecast of a 1.9% increase and the previous month’s 3.0% rise. This suggests that production in the Japanese economy is getting back on its feet after being damaged by the earthquake and tsunami earlier this year. Way to go, Japan!
There aren’t any economic reports on deck for Japan today, which means that the yen could be driven by risk sentiment. If traders still shy away from higher-yielding currencies, the yen could have a chance to add to its winnings today.
What a boring Thursday it was for the yen! The absence of tier 1 news reports from Japan kept the yen’s movement to a minimum yesterday. USD/JPY, for instance, ended the U.S. trading session at 76.86, just 3 pips higher from its open price during the Asian session.
The only piece of data that was released yesterday was the report on core machinery orders. It revealed that core machinery orders surged by 7.7%, which was significantly higher than the 1.9% rise initially expected.
Japan’s forex calendar has nothing in store for us today, so don’t expect any wild moves from the yen. Do watch out for the U.S. retail sales at 12:30 pm GMT later though, as it will probably indirectly affect the yen’s price action!
Save for the dollar, the yen lost its joust for pips against all its other major counterparts. USD/JPY ended the day 5 pips below its opening price at 76.81. On the other hand, EUR/JPY closed at 109.46 after opening at 109.34 and GBP/JPY settled at 125.04 with a 31-pip gain.
It seems like [market sentiment](http://www.babypips.com/school/what-is-market-sentiment.html) dictated the yen’s fate on the charts last Friday. Risk appetite must have cost it its wins against higher-yielding currencies. Meanwhile, negative reports from the [U.S.](http://www.babypips.com/school/united-states-of-america.html) must have allowed it to linger around its record-highs against the dollar.
With that said, make sure you get a feel of market sentiment, ayt? I have a feeling the better-than-expect [GDP](http://www.babypips.com/forexpedia/Gross_Domestic_Product_%28GDP%29) report for Q2 2011 would give investors another reason to continue buying the yen. Analysts were bracing for a 0.6% contraction in economic growth, expecting that the recovery following the earthquake and tsunami was slower. However, the GDP report only printed a 0.3% decline in growth.
Also keep in mind that the [BOJ](http://www.babypips.com/forexpedia/BOJ) isn’t too happy with the yen being too strong. So be wary in going long on the currency too. You may just get whooped if the central bank decides to intervene again.
Bank of Japan officials must’ve breathed a sigh of relief when they saw the yen sell off yesterday. It lost against almost all of the higher-yielding currencies as a broad risk rally knocked it down and didn’t let it up. Will it put up a fight today?
You’d think that the yen would at least go down fighting after printing better than expected GDP figures. The preliminary GDP report that was released early in the day showed a contraction of 0.3%, which is just half the expected decline. Granted, a negative figure isn’t worth celebrating, but one would expect some sort of relief buying upon seeing the better-than-expected results.
Apparently, the effects of the earthquake sealed the deal for Japan’s contraction in Q2 2011 as both private consumption and net exports suffered during the period.
In any case, I’m guessing that risk sentiment will be the main driver behind the yen’s price action today as economic reports from Japan don’t usually have much of an impact on it. That being said, be sure to monitor risk sentiment closely. Remember, for the yen, risk appetite ain’t right! Peace!
With no major reports making waves in Japan, the yen’s price action was as mixed as the colors of Happy Pip’s shoes. EUR/JPY slid by 34 pips to 110.57, but GBP/JPY inched 53 pips higher to 126.34.
The yen bulls and bears might have behaved yesterday, but it I bet it’s gonna take off in a direction soon! Will the Japan’s trade balance report scheduled today at 11:50 pm GMT do the trick?
Analysts are expecting the country’s trade deficit to ease to only 0.12 trillion JPY from its 0.19 trillion figure in June, but keep an eye out for any surprises! Oh, and watch for any shifts in risk sentiment while you’re at it!
The yen inched a little higher yesterday as most of the markets traded quite choppily. USD/JPY ended 20 pips lower to close at 76.50 while EUR/JPY formed a spinning top by closing just 17 lower at 110.43.
Without any major market themes directing traffic for forex markets yesterday, the yen remained pretty still on the charts. It got no guidance from economic data either as the trade balance report only came in a few hours ago, after the New York session had closed.
In any case, last month’s trade balance data didn’t do much to shake up the markets anyway. The report came in pretty much as expected, with Japan posting a deficit of 0.13 trillion yen, an improvement on the 0.20 trillion figure from the previous month. Apparently, exports grew 0.8% in July just as imports decreased by 0.4%.
No reports from Japan today, but as always, keep your eye on risk sentiment! The yen has been one of the few true safe havens as of late, and any shifts towards risk aversion could result in a large yen rally.
Tight trading for the yen versus dollar, as USD/JPY stuck within a range of just 26 pips. It seems as if traders are just too scared to bring USD/JPY past the 76.50 mark, in fears of getting wiped out by another BOJ intervention. Are those fears warranted?
As long as the BOJ keeps mentioning its concern about the strength of the yen, USD/JPY will have trouble dropping to news lows. Of course, this doesn’t mean it WON’T drop – just set your expectations appropriately and don’t be surprised if we see momentary spikes in yen pairs.
Nothing on the docket today, but keep an eye out for risk sentiment. If we continue to see risk aversion take over the market, it may just give the yen the boost to push for new highs. Take note, there’s probably a boat load of stops just below the recent support level on USD/JPY, so if the yen does rally, all those stops might get triggered.
Eep, not another yen-tervention?! The Japanese yen was all over the place last Friday as traders feared that the BOJ would step in the currency markets again. USD/JPY jumped to a high of 76.96 but dipped to a low of 75.96 later on, while EUR/JPY landed 11 pips above the 110.00 handle. Is the BOJ really thinking of intervening again?
Apparently, the BOJ is attempting to have the G7 leaders join forces once more to keep the yen from rising. The last time they did this was when the yen skyrocketed after the March 11 earthquake and tsunami. I guess the Japanese central bank finally realized that they can’t do the job alone, huh? Although the G7 leaders have yet to decide on this matter, the news was enough to spook traders away from the Japanese currency.
This week, only the CPI figures are on tap from Japan. Tokyo is set to release its core CPI reading on Thursday 11:30 pm GMT and show an annualized 0.1% drop in inflation for August. Meanwhile, annual core inflation in Japan is also projected to print a 0.1% decline. Yikes, this could confirm that Japan is also troubled by deflationary problems! More reason to sell the yen, I suppose? Stay on your toes, everyone!
After last Friday’s crazy dip to new all-time lows, USD/JPY is now back trading right below the 77.00 handle. When will the BOJ finally intervene in the markets?
My spies on the street say that everyone is expecting the Bank of Japan to intervene once USD/JPY hits the 75.00 level. Now, I ain’t too sure about this, but one thing to keep in mind is that the there ain’t much high impact data on deck coming out this week. The central bank may take advantage of the tight trading and thin liquidity to help boost USD/JPY to more “preferable” levels.
One other thing to take note of is that U.S. equities bounced back yesterday. If this is the start of a bargain hunting session, we could see risk appetite pick up, which could give some relief to yen pairs.
The yen’s scorecard in yesterday’s trading was as mixed as a bag of nuts. Although it won 10 pips from the dollar, it lost 48 pips to the euro when EUR/JPY ended the day at 110.76.
Here’s my two cents on the yen’s performance:
The anti-dollar sentiment sparked by speculations that the Fed would announce further stimulus this Friday might have allowed it to snatch pips against the dollar. However, risk appetite and talks about Prime Minister Naoto Kan stepping down from his post might be the reason why it failed to rally against its other counterparts.
Our forex calendar doesn’t have any major report from Japan scheduled to be released today. So keep an ear out for updates on Japan’s politics. Keep in mind that political uncertainty almost never bodes well for currencies. Good luck!
Now that’s how you shrug off a downgrade! The yen practically yawned at Moody’s downgrade as it managed to edge higher against the British pound and the euro. Will it do the same today?
The big news surrounding Japan yesterday was Moody’s decision to downgrade Japan’s debt rating from Aa2 to Aa3. According to the credit rating agency, Japan should’ve seen this coming as it has racked up a ridiculous amount of debt over the past 20 years.
In other news, it was also announced yesterday that the government has new weapons to combat the yen’s rise. First, it plans to implement stricter monitoring by requiring financial institutions to report on their foreign exchange positions. It also unveiled a 100 billion USD emergency credit facility to help support Japanese companies in oversees purchasing. The program, which will last one year, is designed to allow Japanese companies to take advantage of the yen’s rise. Talk about getting creative!
However, it seems as though this hasn’t fazed yen bulls as the currency has been holding its ground well enough.
If the government can’t weaken the yen, then maybe CPI data can. Japan’s CPI is due at 11:30 pm GMT and is expected to show a 0.1% decline in prices, up from the previous month’s 0.2% drop.
Based on the yen’s price action, it looks like Japanese government officials deserve a pat on the back! The yen weakened in markets yesterday thanks to a bit of jawboning from Japanese officials. USD/JPY capped the day at 77.48, almost 50 pips above its open price.
Yesterday the government revealed its intention for the Japan Bank for International Cooperation to encourage business expansion outside Japan. The move is intended to weaken the yen as it hints that money will be flowing out of the country.
Will the effect of the government’s jawboning stand today? Remember that market geeks have been at the edge of their seats since the start of the week for Ben Bernanke’s Jackson Hole speech in the U.S. at around 2:00 pm GMT. Heck, traders even ignored Japan’s CPI report released a few hours ago! If you’re interested though, you should know that Japan’s core inflation rate dropped by 0.2% in July after steadying at 0.0% in June, but is still up by 0.1% compared to July’s figure last year.
No other economic report is scheduled for release in the Land of the Rising Sun, so make sure you keep close tabs on the Jackson Hole meeting!
Third place ain’t bad! The yen managed to end higher against all of the major currencies but for the Aussie and the Kiwi. With the Jackson Hole Summit pushing USD/JPY down 80 pips to 76.69, the yen crosses followed suit as traders unwound their risk trades.
The only bit of Japanese data that traders had to work with was the CPI report. Surprisingly enough, prices rose 0.1% rather than fall 0.1% year-on-year. Using my mad detective skillz, I dug a little deeper to see what could’ve caused the uptick, and I saw that energy and food prices shouldered the rise. However, even with such results, Japan is still far from escaping the threat of deflation. If we were to exclude the effects of energy and food, prices would show a 0.5% decline! Clearly, deflation is one ghost that won’t stop haunting Japan.
Later today, at 11:30 pm GMT, we’ll take a look at household spending data. Look for it to show a smaller decline of 2.9%, up from the previous decrease of 4.2%. At the same time, labor market data, in the form of the unemployment rate, will be available, but it probably won’t provide any fireworks as its expected to remain steady at 4.6%.
Last but not least, just before the stroke of midnight, at 11:50 pm GMT, retail sales data will be published. Survey says retail sales last month probably grew 1.2% year-on-year, just as it did in June. Bear in mind that these reports will probably take a backseat to any shifts in risk sentiment as Japanese data rarely move the markets. Good luck out there, kiddos!
Yeouch! Traders were in the mood for risk taking yesterday, which left the yen lagging behind the higher yielding currencies. EUR/JPY edged higher by 15 pips to close at 111.47, but not after hitting an intraday high at 111.94. Meanwhile, AUD/JPY climbed 25 pips to finish at 82.09, the fourth day in a row that the pair has closed higher.
We got some rumblings from the political arena yesterday, as Finance Minister Yoshikiko (No, not the green lizard from Mario Brothers) Noda (no, not the little green Jedi Master from Star Wars) was chosen as the new leader of the Democratic Party of Japan. He will also be taking Naoto Kan’s spot as Prime Minister of Japan.
The question is how long he can last and how well he can implement the DPJ’s proposed economic reforms. Take note that Japan has had FIVE Prime Ministers in the past FIVE years – they changed PMs as often as Apple releases a new iPhone!
Currently, one of the bigger issues in Japan is how the rising yen has affected their export industries. It’ll be interesting to see what moves Noda takes to help stem the tide and weaken the yen.
Late yesterday, retail sales and household spending data were released but unfortunately, had somewhat disappointing results. While household spending came in better-than-expected by posting a 2.1% decline (opposite the 2.9% expected drop), it still means that spending is down. Meanwhile, year-on-year retail sales growth was at a mere 0.7%, down from 1.2% the previous month and way off the 1.1% expectation.
Today, we’ve got preliminary industrial production figures on tap at 11:50 pm GMT. Expectations are that production rose by just 1.6% last month, which would be a significant drop from the revised 3.6% we saw the month before. Now, I don’t expect this to move the markets, but in any case, keep an eye on the report as it could help dictate risk appetite during the Tokyo session tomorrow.
With the FOMC meeting minutes revealing that additional easing measures NOT out of the question, the yen was able to rally across the board yesterday. By the end of the U.S. trading session, the currency was able to a 15-pip gain over the dollar, a 64-pip gain over the euro, and a 104-pip gain over the pound.
Economic data released wasn’t as positive though. Japan’s manufacturing PMI fell to 51.9 from 52.1 and the Preliminary Industrial Production report showed only a 0.6% increase instead of a 1.6% rise.
Japan’s economic cupboard has nothing to offer us today, but I think we’ll still see the yen exhibit some action, especially with the ADP employment change coming out at 1:15 pm GMT later. Pay attention to the results of the report later since it will probably have a hefty impact on the yen’s price action.
Make way for the mighty safe-haven! The yen once again gained across the board as investors bought up safe-haven currencies like there’s no tomorrow. USD/JPY capped the day with a 19-pip loss at 7.6.58, while EUR/JPY also closed 82 pips lower at 110.00.
With Japan’s economic reports printing a bit better than expected, why wouldn’t traders buy up the yen? Yesterday’s average earnings report revealed a 0.1% decline in wages in July, but it wasn’t as bad as the expected 0.4% slip. The housing starts data also clocked in a 21.2% gain in July after only rising by 5.8% in June.
Will the yen continue to dominate its counterparts today? At 11:50 pm GMT Japan’s capital expenditure report will be released together with the country’s monetary base. Still, the yen’s price action was also heavily influenced by risk aversion yesterday, so make sure you also keep a close eye on risk sentiment in the next couple of hours!