Daily Economic Commentary: Japan

The yen was a lone wolf in yesterday’s trading, being the only one among the major currencies to score a loss against the U.S. dollar. USD/JPY ended the day 4 pips higher at 81.30 after it recovered from its intraday low at 81.08.

Word around the FX hood is that traders were wary of buying the yen despite the dovish FOMC statement yesterday because of concerns about the BOJ’s move increase their stimulus package. They remarked that with USD/JPY recent dip below 80.50 hints that the effects of February’s liquidity program may already be fading.

With that said, the yen’s gains will probably remain limited in today’s trading especially since the BOJ is set to take center stage tomorrow morning at 12:00 am GMT when they announce their interest rate decision.

No one expects the central bank to cut or hike interest rates. However, traders will be keeping an ear out for what policymakers intend to do about providing the economy with more liquidity.

The event will probably cause some volatility on the JPY pairs, so be careful!

Surprise, surprise! The yen was actually one of yesterday’s strongest performers! It swept the euro, pound, and dollar, as rumors went around that BOJ Governor Shirakawa may not be as supportive of a loose monetary policy as we think. How will the yen react to today’s much-anticipated monetary policy statement?

Over the past couple of weeks, the yen as been under quite a bit of selling pressure as traders have been anticipating more stimulus from the BOJ. Word on the street was that the BOJ would bump up its bond purchases by either 5 or 10 trillion JPY. After all, the BOJ has made it clear in the past that it’s committed to fighting deflation and supporting the economy, and it’ll need to do quite a bit of easing if it wants to hit its CPI target of 1.0% (especially since the national CPI only came in at 0.2% in April).

Sounds like a big increase in stimulus is a sure thing, right? Not exactly. For the first time in a while, the markets felt a bit of doubt about more QE, as BOJ Governor Shirakawa announced recently that keeping monetary policy too loose for too long isn’t a good idea. This led many to believe that we may see a more modest increase in stimulus, which probably explains yesterday’s yen rally.

Some say that an increase of 5 trillion JPY might disappoint the markets and lead to a stronger yen. These guys believe that it’ll take a 10 trillion JPY increase to satisfy the markets and convince them that the BOJ means business.

Luckily, we won’t have to wait for long to see how the markets will react. All will be clarified any minute now, as the BOJ is expected to hold its monetary policy statement within the next few hours. Be careful out there, fellas! Things could get messy!

The Japanese yen managed to hold its ground against its counterparts last Friday, with USD/JPY closing 38 pips above the 80.00 handle and EUR/JPY ending the week at 106.40. AUD/JPY suffered a slight loss as it landed 5 pips below its 84.13 open price while GBP/JPY closed at 130.66.

The much-awaited BOJ monetary policy statement did result to some fireworks among the yen pairs as the central bank announced its decision to increase its asset purchases by 10 trillion JPY to 29 trillion JPY. Along with that, they also decided to increase its purchases of higher-yielding assets like exchange-traded funds (ETFs) and Japanese real estate investment funds (J-REITS) by 200 billion JPY and 100 billion JPY respectively.
As Forex Gump pointed out in his review of the BOJ’s latest policy decision, the yen initially lost ground after the announcement but quickly recovered when the central bank announced that they would cut the funds of a separate bank lending program by 5 trillion JPY, pulling the net change in bond purchases down to just 5 trillion JPY. If you wanna find out why they did so, then you definitely must read Forex Gump’s BOJ statement review!

This week, the Japanese yen will take a break from top-tier releases as only the average cash earnings figure is due from Japan. This report is set for release on Wednesday 2:30 am GMT and could show a 0.4% uptick in total value of employment income collected by workers.

With Japan on a bank holiday for most of the week, expect the Japanese yen to be heavily influenced by risk sentiment resulting from other top-tier reports. Make sure you check out the rest of my economic roundup and stay on your toes!

“Muscles? I’ve got them!” The yen bulls showed some strength yesterday as global growth concerns weighed heavily on market sentiment. USD/JPY closed 46 pips lower while EUR/JPY ended with a 59-pip loss.

The whole of Japan was out on holiday yesterday so no major data was released.

Today, Japan’s economic cupboard is pretty light as only the Monetary Base (11:50 pm GMT) and Average Cash Earnings (1:30 am GMT) are scheduled for release. The Monetary Base is expected to show a 4.1% increase while Average Cash Earnings is predicted show a 0.4% rise. Both reports typically don’t have a strong impact on price action, so I wouldn’t hold my breath for them!

The Japanese yen took a hit from all of its major counterparts yesterday, with USD/JPY landing above the 80.00 handle and GBP/JPY bouncing above 130.00. It seems that risk sentiment isn’t really on the Japanese yen’s side these days, but is there anything else on the calendar that could move yen pairs today?

Japan didn’t release any top-tier reports yesterday, leaving the Japanese yen to get battered by improved risk appetite. Better than expected figures from the U.S. helped keep traders risk-hungry and it didn’t help the yen that Japan’s monetary base figure came in weaker than expected. The report showed a 0.3% annual decrease instead of the projected 4.1% increase, implying that there is much less domestic currency in circulation.

Japan won’t be releasing any economic reports today, which means that yen pairs could move to the tune of risk sentiment again. With that said, check out the rest of my economic commentary to see which catalysts could influence risk today.

Someone has been pumping iron! The Japanese yen looked extra beefy yesterday as it muscled its way through the charts. It strengthened against its major counterparts, snatching 69 pips away from the euro, 19 pips away from the pound, and even 2 pips away from the mighty dollar! Will it extend its gains today?

Risk sentiment seemed to favor safe haven currencies yesterday as higher-yielding assets sold of in response to weak European data. Judging by the way the markets flocked towards the yen, it looks like the Japanese currency hasn’t lost its safe haven appeal (in spite of the BOJ’s efforts to curb its strength).

If you plan on trading yen pairs today, keep in mind that the markets will be closed in Japan for the rest of the week. That being said, we won’t be getting any Japanese reports, and price action may be muted in the Tokyo session for the next couple of days. In the meantime, you might want to check out the ECB’s rate statement later in the day. It could result in a major shift in risk appetite, so it’s definitely worth a look.

With Japan still on a break from markets, the yen traded in dojiville yesterday. USD/JPY closed 3 pips higher than its open price, while GBP/JPY slipped by 10 pips to 129.74.

Japan will be on its last leg of its Golden Week celebration today, so Japan won’t be releasing any report. But will the yen trade on its safe haven status today? If you recall, the yen’s low interest rates make it attractive for traders who want to park their money away from high-yielding (and usually high risk) currencies.

Keep your eyes on the NFP report coming from the U.S. today at 1:30 pm GMT, aight? That big bazooka usually inspires market volatility more than other many economic reports could, so you might want to watch for any significant deviation from expectations, which is around the 120,000 figure.

Good luck in your trades, fellas!

Thank you, NFP! The disappointing labor market report from the U.S. led to massive gains for the yen, as it triggered a broad-based case of risk aversion. Yen pairs all around dropped like lead weights, and most even recorded huge gaps over the weekend. How will the BOJ react to all of this?

Banks in Japan might have been out celebrating a long weekend these past four days, but they sure made up for their absence today! Take a look at that 54-pip weekend gap on EUR/JPY! It seems traders are still riding the wake of last Friday’s NFP report and are buying up the safe haven yen.

The question now is, how will the BOJ react now that USD/JPY is below 80.00 again? Political parties in Japan have been calling for the central bank to do MORE to stop the yen’s rally, as it seems that its recent stimulus expansion hasn’t done much to stop it from climbing. With the yen recording fresh lows against its counterparts, you can bet that the BOJ is feeling the pressure to act!

What we should watch out for this week is the current account report, scheduled for release on Wednesday at 11:50 pm GMT. Survey says that Japan’s current account surplus will slide from .85 trillion JPY to .65 trillion JPY. If the report shows weak exports in the wake of the yen’s recent rally, it could prompt the BOJ to intervene in the markets, so don’t even think of missing this one, fellas!

Rough day for the yen as EUR/JPY and GBP/JPY jumped higher to fill their weekend gaps. The question is, will this continue or are the yen bulls merely gearing up for another dominating run?

My how things change so quickly! Just when it seemed like the yen crosses were about to head off to new lows, they came roaring back and climbed up the charts on improved risk sentiment!

No biggies coming up today but make sure you read my euro zone commentary for the 411 on the political situations in France and Greece. This is what the market is focusing on right now, which means this is what you should be paying attention to as well!

What a strong run by the yen! The Japanese currency was able to benefit from risk aversion yesterday as it outpaced the higher-yielding currencies. EUR/JPY dipped below the 104.00 handle and closed 11 pips below it while GBP/JPY ended the day right at the 129.00 mark.

Japan didn’t release any economic reports yesterday as euro zone political troubles weighed on risk sentiment and lifted the Japanese yen. The yen rallied so much that USD/JPY dipped below the 80.00 mark, prompting several market participants to worry that a BOJ intervention could be in the works yet again.

Japan is set to release its leading indicators at 5:00 am GMT today and is expected to show an improvement from 96.3% to 97.0% in March. Later on, Japan will release its current account balance and could show a 0.65 trillion JPY surplus, lower than the previous surplus of 0.85 trillion JPY. Weaker than expected data could revive the issue of the yen’s strength and how it hurts the Japanese economy, so make sure you keep close tabs on the report due 11:50 pm GMT.

Oh boy, I bet our friends over at the BOJ are losing sleep over the yen’s recent dominance! Once again, yen crosses slid down the charts as traders keep unloading their risky positions. EUR/JPY set a new low below the 103.00 handle, while GBP/JPY tested below 128.00 before settling at around 128.50. Will the yen continue its hot streak today?

The leading indicators report printed at 96.6%, which was slightly below the forecasted 97.0% figure. Meanwhile, the current account came in at 0.79 trillion JPY, which was much higher than the projected 0.65 trillion JPY. This indicates that more goods were exported than imported in the past month. Was the yen’s decline last month the reason for this uptick?

No biggies for the rest of the week from Japan, so I suggest you focus your attention on the current developments in the euro zone. Make sure you check out my euro zone commentary for the 411 on Greece!

Finally, the BOJ can breathe a sigh of relief… at least, for now. Yesterday, USD/JPY continued to retreat from its 11-week low at 79.43 that it tapped on Wednesday. The pair traded higher and closed the day 33 pips above its opening price at 79.95.

Japan reported a 790 billion JPY current account surplus for March and topped expectations which was for a 650 billion JPY figure. However, instead of buying the yen following the positive report, traders turned the other cheek and sought higher-yielding currencies as risk aversion somehow eased.

I have a feeling that if the reports from China disappoint expectations and traders shift back their focus to the political drama in Greece, we could see the yen rally to its highs again. So be sure you don’t miss the reports we have for today. Good luck!

Say hello to last Friday’s top dog! Once again, the yen was the king of the hill as the markets still had a weak appetite for risk. USD/JPY inched 4 pips down to 79.92 while GBP/JPY erased all of its gains from Thursday and fell 67 pips down to 128.47.

The yen didn’t need support from any Japanese reports as the risk-off environment gave it the boost it needed against its higher-yielding counterparts. As I had predicted, the lack of resolution in Greece’s political drama and weak Chinese data killed the markets’ appetite for risk. Instead, most traders found themselves with a deep hunger for sage haven currencies such as the yen and the dollar!

This week, the yen’s price action will probably still be heavily dictated by risk sentiment. If you plan on trading the news, your best bet will probably be the Japan GDP due on Wednesday at 11:50 pm GMT. Look for this quarterly report to show a 0.9% surge following Q4 2011’s lame 0.2% slide. Keep in mind that a strong reading could stoke demand for the yen and extend its gains. Good luck and happy trading!

The yen ruled the charts like Ja Rule used to dominate billboards back in the day. Thanks to risk aversion, it scored gains against all of its major counterparts. Even the mighty U.S. dollar gave up 11 pips when USD/JPY closed at 79.87. Meanwhile, EUR/JPY closed 72 pips below its opening price at 102.51.

As I said in my USD commentary, concerns about a Grexit and possibly a contagion in the euro zone, spooked investors and caused them to seek the safety of the dollar and the yen.

With that said, it would be a good idea to keep tabs on updates from Europe as the debt crisis will likely continue to dictate price action in the currency markets today.

Aside from that, we also have a few economic reports from Japan which could affect the yen’s fate on the charts as well. Later tonight at 11:50 pm, the core machinery orders report for March is seen to print a 3.3% contraction while the tertiary activity index for the same month is eyed to show a 0.3% decline. Stay tuned!

The yen experienced both success and failure yesterday as it traded in a mixed manner against other major currencies. Against the Greenback, the yen was sold-off, but versus higher-yielding currencies like the euro and the pound, the yen dominated. It looks like the yen is still in second place when talking about safe haven currencies!

No major news reports were released yesterday but earlier today, Japan’s core machinery orders and tertiary industry activity were published. Core machinery orders was reported to have fallen by 2.8%, which is less worse than the 3.8% decrease initially expected. On the other hand, the tertiary industry activity failed to meet forecast as it printed a 0.6% decline.

The yen’s direction today will be determined by the upcoming preliminary GDP report of Japan. Scheduled to publish at 11:50 pm GMT, the preliminary GDP report is slated to show a 0.9% growth.

The yen continued to edged slightly higher, as EUR/JPY closed 6 pips lower at 102.06, while GBP/JPY finished at 127.75, 62 pips below its opening price.

Earlier today, quarterly GDP figures were released and fortunately, came in slightly higher-than-expected. The Japanese economy grew by 1.0% last quarter, which was better than the projected 0.9% increase and a nice change from the previous quarter’s pace of -0.2%. Apparently, consumer spending and public investment are on the rise. The question is, can this keep up?

Nothing on the economic totem pole from Japan today, but that don’t mean you can chill out at the sushi bar. Make sure you check out my euro zone commentary for the 411 on what’s happening in Europe right now!

Thanks to a better-than-expected GDP from Japan, risk sentiment improved yesterday. As a result, USD/JPY’s sell-off stopped, and the pair closed the day barely changed from its opening price during the Asian trading session. In fact, if you look at USD/JPY’s daily chart, you’ll see the most recently completed candle was gravestone doji.

As I’ve mentioned in my update yesterday, Japan’s GDP report showed that the country expanded 1.0% during the first quarter of this year. Moreover, the previous quarter’s figure was revised up to 0.0% from -0.6%. Needless to say, the results of the report were welcome improvements.

No major news release scheduled to be published today so be careful when playing USD/JPY’s downtrend today. It is a Friday, which means we could see a bit of retracement as traders start taking profit before they close shop for the weekend.

Whoever said that all good things come to an end probably shorted the safe-haven currencies last Friday! Thanks to profit-taking ahead of the G8 weekend meetings, the yen bears helped push EUR/JPY 35 pips higher to 101.02 while stopping GBP/JPY’s losses with a doji at 125.18.

There were barely any economic reports released from the major economies last Friday, so the major currencies were exposed to profit-taking ahead of the G8 meetings this weekend.

You see, there were rumors that the Economic Commission and the ECB would intervene in the Grexit crisis, while some were also talking about how Angela Merkel would be more lenient on proposed growth-related policies. Read my Euro writeup to see the details of what happened over the weekend!

There’s a lot of major data scheduled for Japan this week, so better pay attention! Only the report on all industries at 4:30 am GMT is scheduled for release today, but tomorrow we’ll get hold of the trade balance data t 11:50 pm GMT, which will be followed by the BOJ’s interest rate decision on Wednesday. The BOJ monthly report will then be printed on Thursday at 5:00 am GMT, right before Tokyo’s CPI numbers are released at 11:50 pm GMT.

Word around the street is that the BOJ will hint at more easing (or at least a currency intervention) in its announcement this week, so make sure you’re at the edge of your seats and prepared for any surprises!

In the same way that ice cream doesn’t go well with vinegar, the yen also doesn’t fare well when risk appetite is in play. Just take a look at its performance yesterday. It scored losses against all of its major counterparts, giving up 22 pips to the dollar, 54 pips to the euro, and 40 pips to the pound.

But don’t worry yen bulls! Some market junkies THINK that traders may soon seek the yen’s safe haven appeal once bad news pop out of Europe and spark risk aversion. That’s why you need to keep an ear out for updates from the debt-ridden region.

Also, if you’re looking to trade the yen, be sure you keep tabs on the events that we have scheduled on our forex calendar from Japan today as they could also determine the currency’s fate on the charts.

At 11:50 pm GMT, the trade balance report for April will be released and it is anticipated to print a 600 billion JPY deficit.

Then at 12:00 am GMT, the BOJ will take center stage and announce their monetary policy decision. No one really expects a rate cut or rate hike, however, market junkies will have their ears out for the statement’s tone. In particular, if the central bank hints that it will take further steps to weaken the yen, we could see the currency get sold off. Yikes!

Despite being hit by a credit rating downgrade, the low-yielding yen logged in mixed results against its counterparts. USD/JPY shot by 67 pips to 79.97, while GBP/JPY also clocked in a 60-pip gain. On the other hand, EUR/JPY dropped to 101.40 and AUD/JPY slipped to 78.50.

Just when we thought that the yen will continue to trade on risk sentiment, credit rating agency dropped the bomb and downgraded the economy’s rating from AA- to A+. What’s spooking investors is that other rating agencies have already placed the country on a negative outlook and that it won’t take much for them to follow suit.

Good thing that Japan released a positive trade balance data a couple of hours ago! The report showed a trade deficit of 0.48 trillion JPY in April, which isn’t as bad as the 0.62 trillion JPY deficit we saw in March. Still, many analysts believe that Japan’s exports still have a long way to go.

With a credit downgrade on their backs, it will be interesting to hear what the BOJ peeps have to say in their monetary policy decision coming up in a few hours. Market players believe that the central bank won’t be changing its interest rates and stimulus plans this month, but keep an eye out for any hints of the BOJ’s future policy decisions!