Daily Economic Commentary: Japan

Safe-haven flows propped up the lower-yielding Japanese yen in yesterday’s trading, allowing USD/JPY to close nearly 50 pips down from its 79.97 open price and EUR/JPY to dip below the 100.00 handle. What’s in store for these yen pairs today?

The BOJ kept its monetary policy unchanged during their statement yesterday as it kept is overnight rate at <0.1% as expected. BOJ Governor Shirakawa pointed out that Japan is still in the middle of warding off deflation and that cutting rates could result in more damage than good for the Japanese economy.

Today, Japan will release its annual CPI figure for May. Tokyo’s core CPI is expected to show a 0.5% decline while the national core CPI could post a mere 0.1% uptick. Deflation sure is lookin’ pretty nasty in their country yo!

Although risk-off trades could continue to lift the yen today, make sure you stay tuned for any updates in the euro zone situation and for Japan’s CPI release if you’re trading the yen pairs. Good luck!

Due to the lack of top-tier economic reports from Japan, the yen’s performance in yesterday’s trading was mixed. It scored a 39-pip win against the euro at 99.77 but gave up 11 pips to the dollar when USD/JPY closed higher at 79.60.

In this old man’s opinion, the reason why the yen wasn’t able to extend its gains against the Greenback was because the dollar had a couple of relatively good economic reports that supported it on the charts yesterday.

Our forex calendar is once again blank for high-caliber reports from Japan today which probably means that we’ll see the yen trade based on market sentiment. So be sure you keep tabs on the euro zone, ayt?

The Japanese yen’s performance was as mixed as a bag of nuts last Friday, but it did manage to end the week higher than its major counterparts. This week, the yen gapped down against its rivals so let’s take a look at the catalysts that could get these gaps filled.

Over the weekend, the BOJ released its monetary policy meeting minutes which revealed that several officials felt wary about further easing as this could be misinterpreted as monetization by the central bank. This means that they are worried that the public might think that the BOJ’s large asset purchases are being used to finance government spending, which isn’t really the case.

Today, Japan is set to release a few reports which could result in additional volatility for the yen pairs. The household spending data is due 11:30 pm GMT and is expected to show an annualized 2.5% increase for April, weaker than the 3.4% growth seen last March. Meanwhile, the unemployment report could show that Japan’s jobless rate held steady at 4.5% so make sure you watch out for that at 11:30 pm GMT as well.

A few minutes later, at 11:50 pm GMT, Japan will print its retail sales data for April. This report is also expected to highlight weaker consumer spending in Japan as the yearly figure could come in at 6.2%, much lower than the previous 10.3% increase.

There ain’t no stopping the yen! Among the three most traded currencies, it was the strongest performer as it posted gains against both the dollar and the euro. Will the markets continue buying up this safe haven currency?

So far, they haven’t reacted much to the slew of reports that Japan dished out a couple hours ago. And I can’t blame 'em! After all, the results were about as mixed as a bag of M&Ms!

While household spending recorded better-than-expected results with a 2.6% increase (versus forecasts for a 2.5% uptick), the unemployment rate unexpectedly rose from 4.5% to 4.6%, instead of staying flat. Meanwhile, retail sales data disappointed by following up March’s 10.3% surge with a soft 5.8% increase (versus forecasts for a 6.2% uptick).

We don’t have any other major reports coming out from Japan today, so for now, I suggest y’all keep track of risk sentiment. Remember, risk aversion is the yen’s friend!

With risk aversion dominating markets, who needs to look at Japan’s economic data? The yen roundhouse-kicked its counterparts down the charts again as concerns in the euro zone heated up. When will the yen’s supremacy end?

Not anytime soon, apparently. Despite weak economic reports from Japan, traders continued to buy the yen like it’s the last piece of prime steak in a meat shop. Japan’s manufacturing PMI came in at 50.7 in May, which is just where the PMI reading was last April.

Unfortunately, we won’t be seeing any more economic data today apart from the preliminary industrial production data scheduled at 11:50 pm GMT. Don’t worry, we’ll probably see plenty of action as the fight against contagion in the euro zone heats up. Not only that, I heard that there are also a couple of big reports from the other major economies!

Keep your head in the game, kids!

Up, up, and awaaay! The yen was in high demand yesterday as risk aversion boosted the markets’ interest in safe haven currencies. EUR/JPY slid 154 pips to land at 97.84, while GBP/JPY fell 190 pips to 122.43. Hmm… We’ve heard this story before, haven’t we?

With the yen continuing its rampage on the charts, BOJ officials have started speaking up again, hinting at possible moves to stall - if not stop - the yen’s rally. According to BOJ Deputy Governor Yamaguchi, the central bank may ease its policy further if deflation starts plaguing the Japanese economy again. I daresay, that ain’t an impossibility, homies! The yen’s rally and the recent decline in commodities can exert downward pressure on inflation!

In other news, the preliminary industrial production report for April just came out, and though it came in below expectations (0.2% vs. 0.6%), it didn’t do much to quell demand for the yen. The average cash earnings report (0.8% vs. 1.1%) also disappointed but it didn’t result in a yen sell-off, either.

It seems that risk sentiment is still the main force behind yen price action. That being the case, it would be wise to monitor developments in the euro zone if you plan on trading yen crosses!

Boo yeah! There really is nothing like risk aversion to get traders hustlin’ towards the yen’s safety. Continued concerns about the fate of the euro as well as disappointing U.S. data allowed the currency to rally against all of its major counterparts yesterday.

USD/JPY closed around its 3-month low at 79.36, 74 pips below its opening price. Meanwhile, EUR/JPY incurred another 95-pip loss as it ended the day at 96.89.

There were a couple of disappointing reports from Japan yesterday but it seems that traders paid them no mind.

The country’s industrial production came in lower than expected for April at 0.2% and disappointed the market’s 0.6% forecast. Also, the average cash earnings report failed to impress, falling short of the market’s 1.1% consensus at 0.8%.

Only the capital spending report for the second quarter of the year was scheduled on our forex calendar for the yen today and it came in higher at 3.3% versus the 1.3% forecast. Keep that in mind! Who knows, the better-than-expected report may just give traders one more reason to buy the yen in this risk averse market environment.

Good luck!

It was almost a perfect day for the Japanese yen as it continued to advance against most of its major counterparts last Friday. USD/JPY dipped to a low of 77.66 before closing at 78.15 while GBP/JPY tumbled to the 120.00 handle. What’s surprising was that the euro managed to sneak in some gains as EUR/JPY closed 15 pips up from its 96.89 open price!

Japan didn’t release any economic data last Friday, as the Japanese yen turned to other economic reports that could keep fueling the safe-haven rally. Luckily for the yen, the U.S. NFP report came in much worse than expected and kept risk-taking in check.

This week, Japan has more than its usual set of events on deck so make sure y’all are in the loop! First up, BOJ Governor Masaaki Shirakawa is set to give a speech at 3:30 am GMT today and possibly drop some hints on the central bank’s future monetary policy decisions. Of course, an added dose of volatility is expected during his speech so you should be careful out there!

The next economic release from Japan will come on Thursday in the form of its leading indicators. The reading is expected to dip from 96.4% in March to 95.2% in April, reflecting a slight dip in economic performance. Later on during the day, Japan will print its final GDP reading for the first quarter of 2012 and probably enjoy a bit of an upward revision from 1.0% to 1.1%.

Friday has the Economy Watchers sentiment index due and this report could print an improvement from 50.9 to 51.2 for May, reflecting stronger optimism for the Japanese economy.

With risk appetite grumbling back into the market, the yen was set aside like an un-appetizing bowl of veggies. EUR/JPY finished 99 pips higher to close at 97.95, while GBP/JPY ended the day at 120.61, up 61 pips from its opening price.

Our buddies over at the Bank of Japan probably let out a sigh of relief yesterday when they saw all the green candles on yen pairs. After all, the yen had been on a major run in May and rumors were starting to circulate that the BOJ may intervene in the markets soon.

Now, I don’t have a crystal ball but I don’t think we’ll be seeing the BOJ do a drive-by on the markets and kill the yen. Not anytime soon at least.

Nothing lined up for Japan, but make sure you keep an eye out for news from the euro zone. If it appears that our amigos over in Europe aren’t any closer to fixing the situation in Spain, then it may trigger another round of risk aversion that could boost the yen once again.

Boy, did the yen have a bad day yesterday. It scored losses against all of its major counterparts as more talks of intervention hit the markets. USD/JPY closed 38 pips above its opening price at 78.75. Meanwhile, EUR/JPY ended the day 11 pips above its opening price at 98.05.

Reports of Japanese Finance Minister Azumi getting G7 leaders to agree in helping out to counter strong currency moves had a bearish effect on the yen. The news spurred concerns that a BOJ intervention could happen sooner rather than later. Yikes!

Today, our forex calendar is blank for reports from Japan. However, we do have a lot of data from the euro zone. Be sure you keep tabs on them as they could affect the overall market sentiment and dictate the yen’s price action as well!

The BOJ must’ve felt extremely relieved after seeing the yen sell off yesterday. It lost massive pippage against its two biggest counterparts as USD/JPY rallied 52 pips to 79.26 and EUR/JPY rose 163 pips to 99.69. Will we see more of the same today?

If the markets keep this up, the BOJ won’t even need to get involved! Remember, Japanese Finance Minister Jun Azumi spoke up a couple of days ago, saying that Japan is ready to intervene if necessary. And those weren’t just empty threats, homies! As I mentioned yesterday, word on the street is that Japan has already approached the G7 to ask for backup!

So far, this seems to be fueling the strong yen sell-off that we’ve been seeing, and assuming we don’t get any new major risk-altering developments, it may continue to do so.

Today, we have a couple of Japanese reports worth noting, but you’ll have to stay up late ('til 11:50 pm GMT!) if you want to catch them. The current account is due and is expected to show a slimmer surplus (from 0.79 trillion JPY to 0.62 trillion JPY). Also, final GDP data will be available, and survey says we’ll see an upward revision on growth from 1.0% to 1.1%.

Now, keep in mind that the markets’ risk sentiment will probably remain the key driver for the yen today, but these reports may just get yen crosses goin’ if they print big surprises!

Thursday was a terrible day for the yen as it lost ground to most of its major counterparts. EUR/JPY ended the day 33 pips above its opening price. Meanwhile, USD/JPY traded higher and closed the day with a 34-pip gain.

The lack of high-caliber reports from Japan might’ve left the currency vulnerable to market sentiment. Unfortunately for the yen bulls, Fed Chairman Ben Bernanke surprised markets yesterday with his not-so-dovish remarks on the U.S. economy.

But perhaps today will be different for the yen. Earlier, an upward revision from 1.1% to 1.2% in Japan’s Q1 2012 GDP was reported. Maybe the revision will be able to provide the currency with some support in today’s trading and offset the disappointment posted by the current account report which printed at 290 billion JPY versus the 620 billion JPY consensus.

Risk aversion reared its head again in the forex market last Friday, allowing the low-yielding yen to rally versus other major currencies. It was able to gain 80 pips over the euro and 84 pips over the pound.

There were two major reports released in Japan last Friday: the current account balance and the final version of the first quarter GDP report. The current account balance came in with a 290 billion JPY surplus, just half of the 620 billion JPY initially expected. Meanwhile, the final GDP figure showed that growth for the first quarter was actually 1.2%, and not 1.1%.

The only major market-moving event on tap for the yen this week is the Bank of Japan (BOJ)’s interest rate decision. It’s scheduled on Friday and the central bank is widely expected to keep rates unchanged below 0.10%.

No wonder they call it the Land of the Rising Sun – that’s all the yen did yesterday! With risk aversion back in tow, the yen was the biggest winner in yesterday’s currency battles. EUR/JPY closed 145 pips lower to finish at 99.20, while GBP/JPY dropped 37 pips to end the day at 123.07.

Rising bond yields and skepticism surrounding the Spanish bailout caused people to unload their positions in riskier assets, which helped benefit the yen. With uncertainty surrounding Spain and the Greek parliament elections coming up later this week, there sure is a ton of potential for the yen to make a nice run up the charts.

In other news, tertiary industry activity dropped by 0.3% in April, down from the 0.4% increase we saw the month prior. This suggests that Japanese companies are spending less on outsourcing, which could indicate a slowdown in business activity.

Late tonight, core machinery orders will be coming in at 11:50 pm GMT. Word out of Tokyo is that machinery orders rose by 1.9% in the past month, which would be a nice improvement from the 2.8% decline we saw the month before.

The low-yielding Japanese yen was unable to hold its ground yesterday as a slight case of risk appetite managed to make its way to the market. The yen was sold-off against other major currencies, giving up 20 pips to the euro and 74 pips to the pound.

Economic data from Japan was mixed. The tertiary industry activity fell 0.3% while the CGPI, or the Corporate Goods Price Index, came in worse than expected at 0.5%. Earlier today, however, the core machinery orders report smashed expectations and published a huge 5.7% gain. The forecast was only for a 2.0% gain.

No hard data headed our way today that could reverse the yen’s move yesterday. Still, it would be best to keep an eye out for market sentiment as it could shift any time!

With no economic report from the Land of the Rising Sun, the yen traded on appetite for the low-yielding currency. Fortunately, some were in a buying mood. While GBP/JPY did fall to 123.19, EUR/JPY had also risen by 41 pips to 99.80. What’s in store for the yen today?

Not much, actually. Looks like all we have on tap is the revised industrial production data due at 4:30 am GMT and even that isn’t expected to rock the yen pairs.

Do keep a close eye on the euro zone and the U.S. though. If investors go back to worrying about Greece, Spain, Italy, and even Cyprus, or if the Fed honchos give more QE-friendly statements, then we might see increased demand for the low-yielding yen.

Stay sharp in your trades, homies!

Consolidation was the name of the game for the Japanese yesterday as it moved sideways against most of its major counterparts. USD/JPY managed to stay above the 79.00 handle while GBP/JPY ranged around the 123.00 mark. Will the BOJ rate decision trigger a breakout today?

The lack of top-tier reports from Japan, combined with the summer’s ranging market environment, allowed yen pairs to cruise along the charts yesterday. Aside from that, traders were probably hesitant to take any large positions ahead of today’s BOJ rate decision.

Although the central bank is expected to keep rates on hold at <0.10% as usual, traders are wary of any comments regarding recent yen strength since the BOJ has been notorious for intervening in the currency markets. Make sure you keep your eyes and ears peeled for that as well because any hint of intervention could send those yen pairs zooming up the charts!

Nothing to see here! Despite an interest rate decision by the BOJ, the yen traded in its usual mixed fashion against its counterparts. USD/JPY suffered a 68-pip drop, but GBP/JPY enjoyed a nice 123-pip rally from its intraday low. What the heck did the BOJ say anyway?

As it turned out, the BOJ kept its rates AND asset purchases like a good boy. The central bank held its rates at 0.10%, kept its credit loan program at 30 trillion JPY, and maintained its asset purchases at 40 trillion JPY. Apparently, the BOJ is on a wait-and-see mode regarding the euro zone’s debt crisis and the developments (or lack of it) in the U.S. economy.

Only the BOJ monthly report at 5:00 am GMT is scheduled from the Land of the Rising Sun today, but keep your eyes glued to the G20 meetings happening today. And while you’re at it, why don’t you check out the economic calendar to see if you can trade any other major reports today?

Good luck in your trades, homies!

The Japanese yen got knocked down by the U.S. dollar, British pound, and Australian dollar in yesterday’s trading, but at least it managed to score a win against the euro. USD/JPY struggled to hold on to the 79.00 handle as it closed at 79.09 while EUR/JPY slipped from its day open price of 100.04 to close at 99.47.

Japan didn’t release any big reports yesterday, but the yen was able to benefit from the rise in Spanish bond yields as it gained ground against the euro. Against its other major counterparts, on the other hand, it seems that the yen was unable to rely on its usual safe-haven appeal!

The BOJ is set to release the minutes of its latest monetary policy meeting today at 11:50 pm GMT. This should shed more light on the central bank’s recent rate decision and also provide some hints on their future monetary policy moves. Also due today is Japan’s trade balance, which is expected to show that the deficit narrowed from 0.48 trillion JPY to 0.36 trillion JPY.

The low-yielding Japanese yen didn’t make any significant moves against the Greenback yesterday and mostly consolidated within a tight range. USD/JPY has been simply bouncing around a 30-pip range for the last 24 hours. However, against the high-yielders like the euro and the pound, the yen was able to post some decent gains. EUR/JPY ended 68 pips higher while GBP/JPY closed 28 pips higher.

Earlier today, the country’s trade balance was released. It showed a 660 billion JPY trade deficit for the month of May, almost double the expected amount.

No other news report is scheduled to come out of Japan today, so the yen’s direction will probably be driven by events happening in other major economies. The Fed’s interest rate decision, for instance, will most likely have a strong effect on USD/JPY. Watch out for it at 4:30 pm GMT!