Daily Economic Commentary: Japan

With risk appetite improving yesterday, the yen was the biggest loser in yesterday’s trading wars. It fell against all its major counterparts, as GBP/JPY and EUR/JPY edged 41 pips and 40 pips higher to finish at 125.34 and 100.36, respectively.

Once again, we’ve got nothing on tap today, but you can bet your Naruto collection that many traders will be paying close attention during the New York session, when the FOMC statement will be taking place.

Should the Fed announce the launch of additional quantitative easing measures, it may just lead to a sharp drop in USD/JPY, which in turn may put the BOJ on intervention watch again. For now, the pair is trading at around 77.70, but should it continue to fall and test former lows around 76.00, we may start to hear some concerns from BOJ officials about the “strength” of the yen.

That’s a 7-month high, baby! The yen rallied to 77.13 following the FOMC statement against the dollar in yesterday’s trading. By the end of the New York session, USD/JPY had settled at 77.53, 33 pips below its opening price.

As you probably know by now, the Fed announced an open-ended QE as its latest plan to boost the economy. Consequently, the news weakened the dollar and allowed the yen to rally.

However, just because QE3 is on the table means that you should go crazy shorting USD/JPY. Some market junkies warn that the BOJ could soon intervene to weaken the yen. Remember that Japan relies a great deal on its exports and so, a strong currency does the economy more harm than good.

With that said, be on your toes for talks about intervention in today’s trading, ayt? Be careful!

Trading on yen pairs was extremely one-sided as the Japanese currency was dumped like a hot potato last Friday. With the markets engaging in a strong risk rally, USD/JPY rallied 86 pips to end the day at 78.39, while EUR/JPY rallied 213 pips to 102.84.

Once again, the yen felt the wrath of the risk-crazy markets as it was one of the weakest performing currencies last Friday. With traders still going on a risk-on frenzy (thanks to Bernanke and QE3!), low-yielding assets such as the yen had difficulty attracting buyers.

Today, our banker buddies in Japan will be celebrating a bank holiday, so action may be more subdued than usual this Tokyo session. If you’re looking to trade the news with Japanese data this week, your best bet might be the BOJ rate decision on Wednesday. No one’s really expecting a change in interest rates, but if the central bank rolls out more easing or if they hint at a future intervention, it could lead to further yen activity.

Talk about starting off on the wrong foot! The yen scored losses across the board in yesterday’s trading. USD/JPY ended the day 38 pips higher at 78.75 while EUR/JPY was up 42 pips at 103.22 by the New York session close.

Speculations about intervention from the BOJ dominated the yen’s price action. With the central bank starting their 2-day meeting today, I wouldn’t be surprised to see the currency react strongly to rumors about potential action from the bank.

So be on your toes! Tomorrow at 12:00 am GMT, the BOJ will be under the spotlight when it finally announces its monetary policy decision. Brace yourselves! Should the Japanese intervene or drop hints that they would soon resort to it, we could see the yen give up more pips to its counterparts.

BOOOOOOOOORING! Due to the absence of market-moving events, the yen simply moved in a horizontal channel versus the dollar yesterday. USD/JPY started the day at 78.75 and ended it barely changed at 78.83.

Today should be quite different though as the Bank of Japan (BOJ) Interest Rate Decision is scheduled to happen a bit later. The market widely expects the central bank to keep rates unchanged at 0.10%, so the focus will probably turn to the accompanying statement and if we’ll see intervention from the BOJ.

With the ECB doing “whatever it takes” to preserve the euro, we may see the BOJ follow suit and implement further easing. Japan’s economy is weak, and the external demand hasn’t picked up yet. The event doesn’t have a set time, but the announcement usually happens just before the European trading session begins (around 6:00 am GMT).

Thanks to a fresh round of easing from the BOJ, yen pairs spiked up yesterday, although the gains were not sustained. Ultimately, USD/JPY closed just 2 pips higher for the day at 78.36.

Everyone, please welcome the Bank of Japan to the monetary easing club!

In a surprise move yesterday, the BOJ increased its bond purchase program by 10 trillion JPY, bringing the total to 80 trillion JPY. Not only did central bankers expand the program, but they also extended it to finish by late 2013.

While the announcement initially led to a yen sell-off, sparking sharp spikes in yen crosses, the excitement didn’t last. By the mid-London session, the yen had recuperated most of its losses.

Earlier today, Japanese trade balance figures were also released. Unfortunately, the deficit clocked in at 470 billion JPY, higher than the projected 370 billion JPY forecast.

Take note that Japan has an export dependent economy, which means that a strengthening yen is actually detrimental to the economy. Perhaps BOJ officials had anticipated worse trade figures and decided to jump the gun on its bond purchasing in an effort to weaken the yen.

No other hard data on tap today, but make sure you keep a close eye on what’s happening in other markets. As my momma always used to say, sentiment can change on a dime, so stay sharp!

That didn’t last very long. The BOJ head honchos must be stomping their feet in frustration right now as their latest announcement of monetary easing failed to weaken the yen. USD/JPY fell by another 10 pips, while EUR/JPY slipped by 17 pips to 101.48. Yikes!

Yesterday the Land of the Rising Sun released its industries activity report. The data revealed a 0.6% contraction in July, which is more disappointing than the 0.3% growth in June. The Ministry of Economy, Trade and Industry also revealed that the decline is mostly due to weaknesses in construction and industrial output.

Meanwhile, the BOJ monthly report echoed the central bank’s sentiments in its last interest rate decision. In the report, the central bank downgraded its economic outlook, saying that economic growth has stalled while other economies are also experiencing weaknesses.

With the yen stubbornly strong and Japan’s trade still in the deficit territory, I’m not surprised that the BOJ is downgrading its growth forecasts. But the central bank better come up with an effective plan soon because from what we’re seeing, monetary easing just isn’t working for the yen.

Another day of gains for the yen, another day of headaches for the BOJ heads. Thanks to risk aversion in markets, then yen capped the day stronger against its counterparts. USD/JPY slipped by another 13 pips to 78.13, while EUR/JPY fell from its 102.11 intraday high and closed at 101.44.

Though Japan didn’t release any economic report last Friday, the currency bulls pushed the yen higher as traders worried more about a Spanish bailout and overall economic growth in the euro zone and the U.S.

Will Japan’s reports over the weekend help weaken the yen? Last weekend the BOJ released its minute meetings, which basically repeated what was in the BOJ’s rate decision and monthly report. According to the minutes, the central bank is expecting high growth risks from the euro zone, the U.S., and the emerging markets. It’s also expecting inflation to stay at around 0% in the near future, but one BOJ member is also thinking of boosting inflation expectations by influencing currency rates.

Only the change in prices of services purchased by corporations (CSPI) is scheduled for released today at 11:50 pm GMT. The data is expected to show a 0.2% decline in prices for August, similar to what we saw in July. A higher-than-expected number could lift the yen a bit more as it shows that companies are willing to pay more for employment.

Good luck trading this week, fellas!

There is just no stopping the yen! Despite the BOJ’s dovishness, it continued to out perform most of its counterparts. USD/JPY ended yesterday’s trading 29 pips below its opening price at 77.85. Meanwhile, EUR/JPY was down 72 pips from the day open at 100.63.

The minutes of the most recent BOJ meeting reiterated the central bank’s concerns about the yen’s strength. Then again, as Forex Gump said in one of his Piponomics articles, the BOJ’s actions still pale in comparison to those of the Fed and ECB. So I guess it wasn’t much of a surprise to see the yen ignore the dovish minutes.

Of course, it also helped the yen that risk aversion dominated market sentiment on renewed concerns about the euro zone.

Our forex calendar doesn’t have any market-moving report from Japan today. This means that the yen’s price action would probably be dictated by the market’s mood swings. With that said, make sure you keep an ear out for updates from the euro zone!

The list of the BOJ’s problems keep piling up! As if dealing with the resignation of Japan’s Finance Minister isn’t enough, the yen also ended another day with gains against its counterparts. And Japan didn’t even release any economic reports! What the heck caused the yen’s gains?

As I mentioned in my EUR and USD commentaries, violent protests in Spain weighed on risk sentiment and boosted low-yielding currencies against its high-yielding counterparts.

Of course, it didn’t help that Japan’s Finance Minister Jun Azumi stepped down from his post and took a higher position in his political party instead. His resignation was taken as a good sign by the yen bulls as it hinted that the BOJ won’t be intervening in the currency markets anytime soon.

Japan’s economic cupboard is once again empty for today, so you might want to keep an eye on the euro zone. If the protests in Madrid escalate or if the euro zone leaders show hints of disagreements over their banking union proposals, then we might see traders flock the low-yielding yen once again.

And the yen scores again! The Japanese currency was able to benefit from risk aversion for another day as it was able to end higher against all of its major counterparts, including the safe-haven U.S. dollar. USD/JPY closed at 77.72 after starting the day at 77.80. Can the yen hold on to its recent gains and go for more?

Japan didn’t release any economic reports yesterday as risk sentiment drove price action among yen pairs. Weaker than expected U.S. data, combined with bleaker prospects for the euro zone, kept risk-taking at bay and propped up the lower-yielding yen.

There are no reports due from Japan today, which means that the yen pairs could continue to move to the tune of risk sentiment. If we see another round of weaker than expected data or if we hear of negative developments in the euro zone, the Japanese yen just might chalk up another winning day!

With the return of risk appetite in the markets yesterday, the yen’s winning streak against its higher-yielding counterparts was cut short as it lost ground to the euro, pound, and Aussie. Against the Greenback though, the yen was still able to catch some gains as USD/JPY closed 11 pips down from its 77.72 open price.

Japan didn’t release any economic data yesterday, leaving the yen helpless amidst the risk on environment. As it turns out, traders were happy about Spain’s recently released austerity reforms and budget plans, and this resulted in a risk rally during the London session.

Today, Japan just released a bunch of economic data which came in mixed so let me break it down for y’all:

First, the good news. Manufacturing PMI saw a slight improvement as it climbed from 47.7 to 48.0 in September, indicating a slower contraction during the month. Household spending also saw a nice improvement as the annual figure rose from 1.7% to 1.8% in August, higher than the estimated 1.1% reading. Lastly, retail sales posted a surprise 1.8% increase as analysts where expecting to see a 0.3% decline.

As for the bad news, deflation is still a big issue in Japan as Tokyo’s core CPI missed expectations of a 0.2% drop and posted a 0.4% decline instead. National core CPI also posted a negative reading (-0.3%) for September, following the 0.3% drop seen last August. Preliminary industrial production also missed the mark as it showed a 1.3% decline, which was way worse than the projected 0.4% decrease.

There are no other reports due from the Japan today so make sure you keep an eye out for any updates that could change risk sentiment. Stay on your toes!

You can’t win 'em all, can you? The Japanese yen had a mixed performance last Friday as it ended higher against the British pound and the Australian dollar but closed in the red against the euro. Will it be able to find a clearer direction today?

Japan’s economic data also came in mixed last Friday as manufacturing PMI, retail sales, and household spending beat expectations while CPI figures confirmed that deflation was still a huge problem in Japan.

Earlier today, Japan’s Tankan survey printed better than expected results for Q3 2012. The manufacturing component came in at -3, which was better than the consensus at -4 but worse than the previous -1 reading. The non-manufacturing component held steady at 8 instead of dipping to 7 as analysts predicted.

With no other reports set for release from Japan, the strong Tankan figures might be enough to keep the Japanese yen afloat for the rest of the day… unless risk appetite is on, that is! Stay on your toes, everyone!

We didn’t get much action from the yen to start the quarter. It barely budged against the dollar as USD/JPY just climbed 3 pips to 78.02. Meanwhile, EUR/JPY found itself 37 pips higher at 100.55. Will we see bigger moves today?

As I had mentioned yesterday, Japan’s Tankan survey delivered a couple of upside surprises, but it wasn’t enough to boost demand for the yen. And today’s average cash earnings report, which also came in better than expected at 0.2% (versus -0.9% forecasts), hasn’t gotten much attention either. Bummer!

What this suggests is that yen price action is still heavily dependent on the markets’ risk appetite. So if you plan on trading the yen pairs today, make sure you monitor risk sentiment and be on the lookout for new developments that may change the markets’ mood!

A better-than-expected report? So what? Like its low-yielding comrades, the yen performed with mixed results against its counterparts yesterday. The yen gained on the comdolls, but lost against the other major currencies. Here’s how it happened.

Thanks to a surprise cut in the RBA’s interest rates, the yen gained against the comdolls yesterday. But the bears also got busy with the other yen pairs as the better-than-expected manufacturing report from the U.S. supported a relatively weak risk appetite. Of course, it also helped that Japan’s average cash earnings went up by 0.2% in August, the first rise in four months, after dropping by 1.6% in July.

The Land of the Rising Sun won’t be releasing any economic data today, so make sure you stay glued to the tube for any news that might affect risk sentiment!

The yen gave up a lot of ground to its major counterparts yesterday as both USD/JPY and EUR/JPY climbed 40 pips. Can’t the yen get any love?

To the delight of the Bank of Japan (BOJ), the yen found itself towards the bottom of the food chain yesterday, with only the Aussie and the Kiwi to feed on. Word on the street is that the BOJ might step in if USD/JPY falls below 77.00, but if this yen selling keeps up, the central bank won’t have to meddle in the markets and intervene to weaken the yen!

Nothing on the economic calendar from Japan today. In the meantime, y’all should practice your risk sentiment-tracking skills as the markets’ risk appetite will probably dictate yen price action today. Peace and good luck trading, homies!

Score another one for the BOJ! Thanks to risk appetite in the markets, the yen clocked in another losing day against its major counterparts. Though it inched 7 pips higher against the low-yielding dollar, it lost 81 pips to both the euro and the pound.

There were no reports released from the Land of the Rising Sun yesterday, but the yen got clobbered across the board when the BOE and the ECB both didn’t add to their stimulus measures. Appetite for high-yielding currencies became even stronger in the U.S. session when the U.S. released its weak economic reports.

Today it’s the BOJ’s turn under the spotlight as it is scheduled to publish its interest rate decision. Investors are at the edge of their seats in guessing whether or not the BOJ will follow up on its decision to expand its asset purchases last month. Will the BOJ follow the other central banks’ footsteps and step back this month, or will they fuel the yen weakness by announcing more stimulus?

Don’t even think of missing the BOJ’s announcement today!

Last Friday, the Japanese yen ended higher against most of its major counterparts, except for the U.S. dollar which benefitted from the upbeat NFP report. USD/JPY closed at 78.67 while EUR/JPY ended the day at the 102.50 minor psychological level.

The BOJ made no changes to their monetary policy during their latest rate statement, but noted that Japan’s export sector isn’t doing so well. According to BOJ officials, industrial production and export activity have been decelerating for the past few months because of low demand from Japan’s trade partners. Business investment and consumption, on the other hand, have remained resilient so far.

Japan is set to release its current account balance today and possibly print a surplus of 0.52 trillion JPY, up from the 0.34 trillion JPY surplus during the previous month. A stronger than expected figure could boost demand for the yen so y’all better keep an eye out for the actual release at 11:50 pm GMT.

For the rest of the week, Japan has a bunch of medium-tier reports set for release. Although these reports aren’t expected to have a huge impact on the yen pairs’ price action, it might be helpful to take note of how the Japanese economy is faring based on these figures.

Tuesday has the BOJ monthly report and the Economy Watchers Sentiment figure due while Wednesday has the preliminary machine tool orders data, core machinery orders figure, and BOJ monetary policy meeting minutes on tap. By Thursday, Japan will release its tertiary industry activity index, which is expected to post a 0.5% improvement.

With traders scaling back on their risky positions, the yen dominated yesterday’s trading scene. EUR/JPY dropped for the first time in 8 days, falling 88 pips to finish at 101.61. Meanwhile, GBP/JPY closed at 125.57, down a whopping 134 pips from its opening price.

Earlier today, a report showed that the current account posted a surplus of 450 billion JPY, slightly more than the projected 420 billion JPY. While this was better than anticipated, it was also less than the previous month’s figure of 630 billion JPY. This indicates that less people are buying the yen in order to purchase Japanese goods, which may mean that they feel the yen is getting too expensive.

This just provides more ammunition for the BOJ to pull the intervention trigger. I wouldn’t be surprised if we see more jaw-boning and threats from the central bank in the coming weeks!

The yen cruised through the charts like a boss in yesterday’s trading. USD/JPY ended the New York session lower at 78.24 after opening at 78.34 while EUR/JPY closed with a 93-pip loss at 100.68.

With risk aversion spooking investors out of higher-yielding currencies, it was no surprise to see the yen trump its major counterparts. Jitters over the equity markets spilled over to the forex hood as investors braced for what could be a disappointing earnings season. On top of that, concerns about the fate of Spain if it doesn’t ask for a bailout gave traders one more reason to seek the yen’s safety.

If the sour market sentiment carries on in today’s trading, don’t be surprised to see the yen extend it’s gains. But don’t get too excited buying the currency, all right? Keep an ear out for BOJ Governor Shirakawa’s speech at 6:00 am GMT today. We could hear some jawboning that could send the yen lower.