Daily Economic Commentary: Japan

Do you like rollercoasters? If your answer is yes, then I’m sure you enjoyed USD/JPY’s price action immensely yesterday! The pair went everywhere, literally! The pair opened up the day at 80.41, and then fell to 79.81, and then strongly rallied to its day open price, and then sold-off again!

The big swings of the pair seemed to have been caused by the U.S. presidential elections and Greek vote. On the one hand, Obama’s re-election means continuation of the Fed’s ultra-accommodative monetary policy, which is negative for the dollar. On the other hand, the uncertainty surrounding the Greek vote increases risk aversion, which is positive for the dollar.

Earlier today, a few medium-tier economic reports were released. The Japanese Core Machinery Orders came in notably worse than expected. It showed a 4.3% decline versus the 1.9% decrease initially expected. Meanwhile, the country’s current account balance showed a 140 billion JPY deficit, opposite the 210 billion JPY surplus consensus.

No more data for the rest of the day but I think we’ll still see quite a bit of movement from the yen as a lot of traders probably haven’t priced in their expectations for Obama’s next 4 years. Let’s see what will happen to price action today!

Weak economic data? No problem! The yen triple roundhouse kicked its counterparts yesterday as investors turned to “safe havens” amid the risk aversion in the markets. USD/JPY fell by 51 pips, EUR/JPY dropped by 80 pips, and GBP/JPY 87 pips. What the heck happened?!

Whatever the yen bulls were thinking, they certainly weren’t considering Japan’s economic outlook. The country’s core machinery orders slid by 4.3% in September, much worse than the 1.9% downtick that analysts were expecting.

Japan also printed its first current account deficit for the first time in more than three decades! The data showed a 0.14T JPY deficit in September, which suggests that more money is flowing out than coming into the Japanese economy. Uh-oh.

Today only the consumer confidence data at 6:00 am GMT is scheduled for release. Still, I have a feeling that the yen will most likely trade on risk sentiment. Keep an eye out for reports that might influence risk appetite, will ya? I hear that China is about to print lots of economic data in a couple of hours.

Just like the safe haven U.S. dollar, the low-yielding Japanese yen was able to flex its muscles last Friday. It rallied versus other major currencies, gaining the most against the euro and the pound. EUR/JPY, which had opened at 101.20, had fell to a fresh one-month low before closing the day at 100.99. Meanwhile, GBP/JPY dropped to 126.35 from 126.85.

No notable economic reports were released in Japan last Friday but earlier today, the country did publish some medium-tier data like the Preliminary GDP report and the Tertiary Industry Activity.

The Preliminary GDP report came in below expectations. It showed that the country shrunk 0.9%, slightly worse than the 0.8% contraction the market had initially anticipated. In contrast, the Tertiary Industry Activity showed a 0.3% gain, which was much better than the flat reading expected.

No important reports for the rest of the week for Japan so the yen will most likely be driven by events taking place in other parts of the world. Pay special attention to market sentiment too, as another round of risk aversion could result in another yen rally.

Looks like fundamentals traders lost the round yesterday! Despite the weak data from Japan, the yen posted gains against most of its counterparts. Guppy fell by 15 pips while USD/JPY also slipped by 3 pips. What the heck were the yen traders thinking?!

Whatever motivated the yen bulls to charge, it certainly wasn’t Japan’s economic prospects. If we dig deeper into the GDP report released yesterday, we’ll see that weak demand from the euro zone as well as the strong yen weighed heavily on exports, Japan’s bread and butter. Exports contracted by a whopping 18.7% in the third quarter, which also dragged capital expenditure by 12.1%. Yikes!

Only the revised industrial production data at 5:30 am GMT is scheduled to print today, so you better stay glued to the tube for any reports from the euro zone and the U.S. that might affect risk appetite!

More specifically, keep your eyes peeled for any clues on when the euro zone officials could release Greece’s next bailout tranche. If we don’t see any promises by the end of the month, then risk sentiment could be in a world of hurt!

The yen still managed to hang on to its gains in yesterday’s trading as risk aversion continued to dominate sentiment. EUR/JPY closed 14 pips lower at 100.88 while USD/JPY finished 6 pips below its opening price at 79.40. But what’s this?! Word around the hood is that political uncertainty is once again brewing in Japan.

Rumors are that Prime Minister Noda could soon dissolve the lower house. Although holding snap elections has been part of his plan to get kore votes for the consumption tax, the risk of his party (DPJ) losing majority in Parliament could spell instability in the government.

The issue could soon rock the yen so make sure you keep tabs on it!

What a very painful Wednesday it turned out for the yen! The yen sold-off sharply yesterday as Prime Minister Noda indicated that he would dissolve the lower house of the Parliament on Friday. USD/JPY rose to 80.17 from 79.40 while EUR/JPY soared to 102.18 from 100.89.

By dissolving the lower house and holding a snap election within the next 40 days, the Prime Minister hopes to end months of political bickering. Noda’s move aims to create a more stable Japanese government so that they will be able to pass the bills needed to fund future government spending.

No significant economic reports due to be released today but given yesterday’s events, we may see the yen continue selling off. After all, it was a pretty big move from Noda, and traders could still not be done pricing in their bearish expectations.

Ka-pow! The yen got kicked into the bear lair once again yesterday. USD/JPY tapped its 7-month high at 81.47 before closing 103 pips above its opening price at 81.20. Meanwhile, EUR/JPY was up at 103.73 by the end of the New York session after starting the day at 102.18.

Very dovish comments from Japanese policymakers sparked the sell-off in the yen. DPJ leader Shinzo Abe, who is widely expected to take over Yoshiko Noda as Japanese Prime Minister, said that the BOJ needs to take on bolder measures in order to combat deflation. He’s arguing that the central bank adopts a massive quantitative easing program. Yikes! Of course, that was enough to send the yen lower against all of its counterparts.

Today, our forex calendar doesn’t have any economic data from Japan. However, given yesterday’s price action, you should make sure you’re on your toes for what Mr. Abe has to say. Who knows, his dovishness might get the yen sold-off… AGAIN.

It wasn’t exactly the best way to end the week for the yen as it lost ground to most of its major counterparts last Friday. The yen was able to score some gains against the euro though, as EUR/JPY closed 36 pips down from its 103.73 open price. What’s in store for the Japanese currency today?

Although Japan didn’t release any economic reports last Friday, the political shake-up in the country seems to be taking its toll on the yen. As Forex Gump mentioned in his article about Japan’s upcoming general elections, it looks like Japan’s next potential leader could favor aggressive easing policies and a weaker yen.

Don’t forget that the BOJ is set to make its monetary policy statement tomorrow and that analysts are saying that current Prime Minister Noda might make one last effort to swing the votes in his favor by pushing the central bank to implement further stimulus. Other market participants, on the other hand, are skeptical that the BOJ will ease again since they just unveiled an increased bond purchase program last month. Stay on your toes for the actual announcement anytime within the Asian session!

Ouch! The Japanese yen got trampled on by its major counterparts during yesterday’s trading as risk appetite surged. EUR/JPY jumped above the 104.00 mark and closed at 104.19 while GBP/JPY ended the day at 129.37. Will the yen continue to lose ground today?

Japan didn’t release any economic data yesterday, leaving the yen vulnerable to risk sentiment. Unfortunately for the lower-yielding currency, stronger than expected U.S. existing home sales boosted risk appetite yesterday.

Today’s BOJ rate decision could turn things around for the yen, especially if the central bank keeps rates on hold and decides not to implement any drastic changes to monetary policy. However, the current government is under pressure to step up its efforts when it comes to boosting economic growth and warding off deflation. Will Prime Minister Noda push the BOJ to implement another round of easing? Make sure you keep your eyes and ears peeled for the actual statement anytime during today’s Asian session!

Once again, the Japanese yen failed to record wins against its major counterparts, even though the BOJdecided to keep its hands in its pockets in its latest rate decision. USD/JPY rose 36 pips to end at 81.71, while EUR/JPY climbed 46 pips to 104.65. When will the bleeding stop??

In deciding not to ease monetary policy further, the BOJ basically stuck its tongue out at the government, which has been pressuring the central bank to something to boost the economy.

Though the BOJ maintained its dovish tone and grim outlook for the economy, BOJ Governor Shirakawa shot down suggestions to ease monetary policy. He said that negative interest rates would probably do the economy more bad than good. Then he went on to say that Japan should focus on increasing investment opportunities instead of simply pumping more money into the economy.

He also claimed that raising the central bank’s inflation target from 1% to 3% isn’t necessary, given that the economy can perform even with lower inflation, as proven by the 1980s, when the economy was prospering and inflation was only at 1.3%.

In other news, Japan recorded a wider-than-expected trade deficit last month, clocking in at .62 trillion JPY instead of just .46 trillion JPY. Both exports and imports suffered in October, with exports declining by 2.8% and imports falling by 7.8%.

Unfortunately, Japan won’t be releasing any more reports today, so if you plan on trading the yen, make sure you keep tabs on risk sentiment!

Yowza! The yen continued its losing streak yesterday as Japan printed weak economic reports. USD/JPY shot up by 78 pips while EUR/JPY enjoyed a nice 114-pip rally. Is the yen starting to trade on fundamentals?

Not exactly. Though threats of easy monetary policy is keeping the yen bulls at bay, the yen might have also weakened on the risk appetite that dominated market sentiment yesterday. Traders were on a buying mood on short covering ahead of Thanksgiving holidays and the low-yielding yen was one of the casualties.

Of course, it wasn’t any help that Japan released a weak trade balance report. The country’s trade deficit widened to 0.62 trillion JPY in October as weak euro zone demand and the scuffle with China dragged exports by an annualized 6.5% rate, a three-year low. Heck, even imports slipped by 1.6%!

Japan won’t be releasing economic reports today, so we might see tight ranges and low volatility for most of the trading day. Keep an eye out for any breakout patterns!

It was a day of mixed results for the yen. While it managed to stop the bleeding against the dollar, it couldn’t help but weaken further versus the euro. USD/JPY ended 5 pips lower at 82.44 after trading as high as 82.85, while EUR/JPY rallied 41 pips to a new 6-month high at 106.20. When will yen sellers finally run out of steam?

So far, it seems like expectations of aggressive monetary easing from the BOJ are still keeping the yen from posting gains. But for how long will this last? Keep in mind that the yen is a traditional safe haven asset, so a sudden market scare could trigger a bout of risk aversion and send the yen back up the charts.

Today, it’s Japan’s turn to celebrate a bank holiday - Labor Thanksgiving Day! With many of our Japanese homies sitting out this Friday, action on yen pairs during the Tokyo session might be a bit subdued.

There just ain’t no mercy for the yen, is there? Once again, the yen was one of the biggest losers in the forex market, as it dropped for the 9th time in the past 10 trading days. GBP/JPY rose 63 pips to finish at 132.10, while EUR/JPY ended the day at 106.88, up 68 pips from its opening price.

The yen has been under extreme pressure over the past couple of weeks, as there’s speculation that the Liberal Democratic Party will implement aggressive policies to help boost the Japanese economy, should head honcho Shinzo Abe win at the next election this coming December. Some believe that the LDP’s plans could include further weakening of the yen, as well as other policies geared towards achieving a target GDP growth of 3%.

Earlier today, the minutes of the latest MPC meeting revealed some concern about the slowdown in economic activity from Europe and China, but it wasn’t anything too different from what we’ve seen in the past.

No biggies lined up over the next couple of days, but make sure to keep an eye out for those yen pairs. At the rate that it’s going, USD/JPY may just slide back over 100.00 before the end of the year!

The Japanese yen did a Chumbawamba yesterday as it got knocked down but got up again, even managing to end the day higher against its major counterparts! USD/JPY dipped below the 82.00 handle then closed at 82.17 while EUR/JPY snapped its losing streak and ended the day at 106.50.

The recently released BOJ monetary policy meeting minutes revealed that the central bank was focusing more on battling deflation and its negative effects on the Japanese economy. As BOJ Governor Shirakawa mentioned in his speech, the BOJ eased monetary policy two months in a row precisely to be able to stoke inflation in the country. On top of that, he also mentioned that the BOJ will continue to look in to measures that will curb the yen’s strength.

There are no economic reports on Japan’s schedule for today so make sure you keep close tabs on risk sentiment to figure out where the yen could be headed. Good luck trading!

Is this the start of a big run for the yen bulls? For the second day in a row, the yen came out on top, as a slight case of risk aversion swept through the markets. EUR/JPY closed at 106.27, down 23 pips from its opening price, while both GBP/JPY and USD/JPY remained unchanged at 131.61 and 82.17, respectively.

The Greek debt deal didn’t cause too much optimism in the markets, while the fiscal cliff remains a dominating theme weighing on the markets. This just goes to show that when trading yen pairs, it is of utmost important to keep an eye on risk sentiment, as it will ultimately be the deciding factor on yen price action!

Late today, Japanese retail sales figures will hit the airwaves. Word out of Tokyo is that sales dropped by 0.7% last month, after they had risen by 0.4% the month before. While I don’t expect this to affect yen price action too much, we could see a small spike when it’s released at 11:50 pm GMT, so watch out if you’re scalping at that time!

Yen bulls would probably wake up feeling like P. Diddy today after the currency’s run on the charts yesterday. USD/JPY finished the day lower from its opening price of 82.17 to 81.91. Meanwhile, EUR/JPY closed 36 pips lower at 105.92.

While there weren’t any top-tier data released from Japan, it would seem that the currency benefited from remarks made by the upcoming Japanese Prime Minister Shinzo Abe’s Economy Minister. He clarified that, although Abe wants the BOJ to loosen monetary policy even further, there is no need to resort to dire measures such as firing the central bank governor when the inflation target isn’t met.

Many viewed this as a sign that the new government won’t be so aggressive in launching more stimulus, consequently boosting the yen.

I think that these remarks would continue to prop up the Asian currency in today’s trading. But then again, Japan’s retail sales report for October printed a 1.2% contraction and disappointed expectations for a more modest decline of 0.7%. Yikes!

What do you think? Will we see the currency get sold off following the negative figure?

Ka-pow! The yen got kicked to the curb once again in yesterday’s trading. EUR/JPY finished the day higher at 106.54 after opening at 105.92. Meanwhile, USD/JPY ended with a 21-pip gain at 82.12.

Once again, upcoming Japanese Prime Minister Shinzo Abe said that he wants the BOJ to aim for an inflation target of 2%. Boo! Of course, his remark weighed on the yen as it implies that the central bank would need to engage in more stimulus measures in order to meet the target.

The currency also continued to get sold off during the Tokyo session today following the mixed roster of reports released from Japan. While household spending (-0.1% vs. -0.8%) and industrial production (1.8% vs. -1.8%) for September topped expectations, Tokyo’s core CPI (-0.5% vs -0.4%) for October came in lower than expected.

Would the sell-off carry on all throughout the day? Err, I’m not really sure. I have a feeling that market sentiment would have a big effect on the yen’s price action though. With that said, make sure you’re on your toes for updates from the U.S. and Europe. News that spark risk aversion may just allow the yen to pare some of its losses!

Tsk, tsk! That ain’t the way to end the month, yen. On the last day of November, the Asian currency chalk up losses against most of its counterparts. EUR/JPY finished Friday’s trading 57 pips higher at 107.11 while USD/JPY closed 27 pips above its opening price at 82.40.

Some market junkies are scratching their heads, trying to figure out what the reason is behind the yen’s weakness. After all, it seems that risk aversion picked up and U.S. data failed to meet expectations but the currency still lost against its counterparts.

My best guess is that traders might have taken advantage of the recent pullback in the yen and re-positioned their shorts ahead of Japan’s December elections. Keep in mind that most analysts expect the uber-dovish Shinzo Abe to become the country’s next leader.

Today, BOJ Governor Shirakawa is scheduled to make a speech at 4:00 am GMT. Be on your toes for what the central bank head honcho has to say. Who knows his remarks could just move the yen!

The yen’s price action was as mixed as the alphabet soup as investors traded on risk sentiment. USD/JPY slipped by 17 pips on weak U.S. data, but optimism in the euro region boosted EUR/JPY by 50 pips and GBP/JPY by 48 pips.

Aside from printing a weaker-than-expected capital spending report, we also heard from BOJ head honcho Shirakawa. In his speech, he reiterated the importance of maintaining the BOJ’s mandate of price stability and all but rejected Shinzo Abe’s calls for more aggressive monetary policies.

It looks like the weak monetary base report (5.0% vs. 11.4% expected) didn’t affect the yen pairs much in the early Asian session, so we might have to keep close tabs on other big-hitting reports scheduled to come out such as the interest rate decisions of the RBA and the BOC.

Stay sharp, kiddos!

Look like the yen bears took a breather yesterday, as the yen was able to recuperate some of its recent losses against the pound and euro. GBP/JPY finished at 132.34, 51 pips below its opening price, while EUR/JPY ended 18 pips lower at 107.20.

The yen may have benefitted from profit taking on USD/JPY, as the scrilla was the biggest loser in yesterday’s trading matches. Still, with Japanese elections coming up in less than two weeks, we could see more consolidation on yen pairs as traders don’t know what will happen if a new regime takes over.

For the meantime, just pay attention to everything else that’s happening in the market, as you never know what might dominate market sentiment!