The JPY gave way to the USD as Japan’s domestic consumer goods price index indicated that deflationary pressures still haunt the Japanese economy. Trading was mixed for Yen crosses, however, with the GBPJPY closing higher and the AUDJPY and EURJPY chalking up losses.
The consumer goods price index report showed that price levels fell by 6.7% year-over-year in October. Still, Bank of Japan Deputy Governor Hirohide Yamagushi said that falling prices would not hamper Japan’s recovery.
Today, Japan has industrial production data and a gauge of household confidence on tap. No revisions are expected for the 1.4% uptick in September’s industrial production reading while household confidence is seen to post a marginal improvement from 40.5 to 40.9 in October. These reports are due 5:00 am GMT.
Meanwhile, US economic reports due later on could have a huge impact on the markets. Its trade balance data, which could show that their deficit widened from $30.7 billion to $31.8 billion in September, is due 1:30 pm GMT. University of Michigan would release its index of consumer sentiment at 3:00 pm GMT. The index could climb from 70.6 to 71.1 and indicate that consumers are becoming increasingly confident about their financial condition.
The JPY concluded last week’s trading in a mixed fashion as it closed positively against the EUR, GBP, and USD but fell versus the AUD and the NZD. Japan’s third quarter GDP report will be published today. Its result could set the tone of the JPY’s short to medium term direction.
Japan’s revised industrial production in September came in better than expected at 2.1%. The account was only seen to stay flat at 1.4%. Meanwhile, the country’s household confidence for the month of October failed to increase as it just remained at 40.5. It was anticipated to rise slightly to 40.9. The results of these two accounts gave some mixed signals regarding the state of the economy. Nonetheless, the reports had a muted impact on the yen’s short term valuation.
As mentioned, this week will kick off with the release of Japan’s third quarter GDP today (November 15) at 11:50 pm GMT. Japan’s economy is projected to have expanded again by 0.7% during the last quarter. Recently, China and the US, which are both Japan’s biggest trading partners, have exceeded their growth expectations for the same period. With those in mind, it is also probable for Japan to post some handsome results. A better-than-expected GDP growth could give the yen some boost.
However, with some of their stimulus programs scheduled to expire soon, Japan’s economy faces the risk of dipping again. With its government debt already running at around 178% of its 2008 GDP, it would be interesting to see how they will approach their new found dilemma. Will they launch another set of stimulus programs? Will they continue with their massive spending plans? Today’s GDP result could provide one piece of the puzzle.
The yen traded slightly higher against its western counter parts in yesterday’s trading session. The USD/JPY pair closed the US session at 89.12 while the EUR/JPY pair closed at 133.43.
Support for the currency most probably came from the positive results of its GDP report released early that day. Instead of showing only a 0.7% in Japan’s economy, the GDP report printed a 1.2% expansion, indicating that government stimulus is starting to work its magic. Economists believe that Japans’ economy has nowhere to go but up, now that consumer and capital spending have bottomed up.
In other economic news, the September tertiary industry activity report, which measures the total monthly change in value of services bought by businesses, showed a 0.5% decrease, opposite the 0.1% increase predicted.
No economic data is due for release for the rest of the day so unless there are any surprise, expect the yen’s price action to be dictated by technicals and risk sentiment.
Mixed trading for the yen yesterday, as it fell against the dollar but was able to make headway against the euro. The USDJPY closed slightly higher at 89.29, while the EURJPY fell to 132.80.
No high impact data is on deck over the next couple of days. I have a feeling that traders are gearing up for the monetary policy statement that will be released on Friday. Till then, let me warn you once again to stay on your toes and take note of reports coming out from other countries. Given the mixed trading yesterday, we could be in for more wild movement over the next couple of days.
JPY trading was mixed yesterday as it lost ground against the USD and EUR but refused to back down from the GBP and AUD. It looks like the JPY’s knees are starting to buckle as the Organization for Economic Cooperation and Development pointed out several weaknesses in Japan’s economy.
Japan’s ballooning public debt could be its economy’s Achilles heel as it puts constraints on the government’s spending programs. With Japan’s public debt projected to swell to 200% of their GDP, the OECD advised the Democratic Party of Japan to hold back on some of their spending initiatives.
Today, Japan will release all industries activity index for September. This report, which is due 4:30 am GMT, could show that the total value of goods and services purchased by businesses slid down by 0.1% during the month. With this downbeat forecast, would the JPY’s knees finally give way?
It was New Year in Japan yesterday as the Yen rallied hard against all the major currencies. Optimism in the global capitals markets suddenly dissipated. This, ironically, lifted the JPY in a broad-based fashion.
Japan’s economic calendar was free of top tier reports yesterday. The equities markets in the US slumped due to a lack of positive economic news in the US. Not even the better-than-expected Philadelphia Fed manufacturing index was enough to boost confidence in the markets. As a result, the “safer” currencies, USD and JPY, rose.
Today, the Bank of Japan will have its interest rate decision. The time of the decision’s release is, however, tentative. In any case, the bank is still expected to leave its interest rate unchanged at 0.10%. Some economists even say that the bank will hold it at that level until mid of next year. Despite having a positive GDP growth during the last quarter, the country remains in a deflationary environment. This is one of the main hindrances why the bank is in a dilemma to increase its rates.
So unless the bank makes a surprise move, the JPY could continue its longer term down trend against the other majors. This is in a way beneficial for Japan’s economy as lower yen valuation makes its exports more competitive in the international trade.
The risk aversion camp was victorious in the foreign exchange markets last Friday, which helped the yen edge up against most major currencies.
Japan’s celebrating its Labor Thanksgiving Day today so don’t expect anything on the economic cupboard today.
Looking ahead, the important reports to watch are the BoJ Monthly Report on Tuesday (4:00 am GMT) and the Monetary Policy Meeting Minutes on Wednesday (11:50 pm GMT). The BoJ monthly report contains the data the bank used in deciding where to set Japan’s interest rates. It also details the bank’s opinion on where Japan’s economy is headed. Meanwhile, the Monetary Policy Meeting Minutes is basically the same thing as the monthly report with the exception that it only deals with the most recent interest rate decision.
As for economic data, expect to see Tokyo’s consumer price index and Japan’s household spending and retail sales report on Thursday.
Tough day at work for the yen, as it got overlooked by traders who were risk hungry yesterday. The yen stumbled against the EUR and GBP, as high yielding assets were in demand.
The BOJ monthly report will be ready today at 5:00 am GMT. It isn’t expected to cause too much noise in the markets. Nevertheless, better to be aware of it as it could reveal some insight into what the Bank of Japan plans to do over the next couple of months.
Tonight at 11:50 pm GMT, trade balance data will be available. It is expected that the report will print a surplus of 310 billion yen for the month of October, up from the previous month’s figure of 60 billion yen.
We could see a lot of movement in the markets today, as several high impact reports will be released throughout the European and US sessions. These reports – such as the German Ifo index, UK inflation hearings and US Preliminary GDP reports – could all be catalysts for major moves. Make sure you’re prepared, otherwise, it’d be best to sit on the sidelines!
Profit-taking worked for the benefit of the JPY yesterday. Despite the weak economic reports from Japan, the JPY managed to strengthen against its major counterparts.
With Japan wallowing in deflation, Finance Minister Hirohisa Fujii urged the BOJ to adopt measures ensuring that falling consumer prices would not constrain recovery. This could force the central bank to expand their debt purchase programs since there is no more room for further rate cuts. Also, the central bank might be feeling pressured to act quick as falling demand could result to a deflationary spiral. Consumers are evidently keeping their money in their pockets as shown by the 5.2% drop in supermarket sales for October.
The good news is that increased global demand could prop the Japanese economy up. Japanese exports fell at a slower pace than expected, as shown by the recently released trade balance data. The trade surplus widened from 0.06 trillion JPY to 0.42 trillion JPY in October.
Today, the minutes from the latest BOJ monetary policy meeting will be released. This report could shed more light on the BOJ officials’ plans to combat deflation. Watch out for that by 11:50 pm GMT.
The JPY lost against most of the other majors except the AUD and the USD in yesterday’s price action. Positive economic reports in the US caused a rally in the capitals markets which in turn brought weakness to the relatively ‘safer’ dollar and yen.
Earlier today, the BOJ published the minutes of its last monetary policy meeting. In the bank’s last meeting, officials decided that the BOJ “should maintain the extremely accommodative financial environment by holding interest rates at their current low levels.” With the government’s recent pronouncement of deflation, more pressure now rests on the BOJ to make the necessary monetary moves especially now that the government doesn’t have much cards up its sleeves given the country’s declining tax revenue and soaring debt.
In the meantime, Japan’s annualized household spending is seen to rise again by 0.6% in October after posting a 1.0% advance in the previous month. Also, both the y/y national and core Tokyo CPI are expected to improve slightly in November from their miserable figures. The former is projected to improve to -2.0% from -2.2% while the latter is also estimated to progress a little bit to -2.2% from -2.3%. These reports will be issued today at 11:30 pm GMT.
On a negative note, Japan’s unemployment rate is anticipated to have rise to 5.4% from 5.3% in October. Moreover, the country’s annualized retail sales for the same period is seen to have dropped again by 1.5% after already falling by 1.3% in September.
The JPY could be on shaky grounds again given Japan’s weak economic figures above.
The yen was having a Thanksgiving party of its own yesterday as it celebrated with huge gains against the major currencies. In fact, the yen stole the thunder from the greenback, its safe-haven rival, as the USDJPY broke through several support levels.
Increased risk aversion was one of the main catalysts for the yen rally yesterday. Investors flocked to the safe-havens as news of Dubai’s probable debt default surfaced. I heard that their government already asked for an extension of their debt from well-known financial companies, causing credit-rating agencies to lower their ratings on state-run companies. My my, it looks like global financial stability isn’t set in stone yet!
Apart from gaining from risk aversion, the yen was able to benefit from strong economic reports from Japan. Advancements were seen particularly in the consumer sector as spending and employment improved. Household spending rose by 1.6%, beating the consensus of a mere 0.6% increase. Price levels in Tokyo fell by only 1.9%, slightly better than the forecast of a 2.0% decline in CPI. Japan’s unemployment rate fell from 5.3% to 5.1% instead of rising to 5.4% as estimated. Retail sales fell by only 0.9%, less than the expected 1.5% decline.
For today, Japan’s economic calendar is empty but the yen could carry on with its rally… unless we see a drastic change in risk sentiment. US traders are still enjoying their holiday so we all know what that means: low liquidity and high volatility! Be careful out there!
The yen rallied across the board in last Friday’s trading. The JPY made a strong push against the other majors during the first part of last Friday. It, however, lost some of its gains after.
Japan’s economic calendar was report-free last Friday. As mentioned, the yen continued to dominate the other currencies due to the persistence of risk aversion in the markets. Investors and traders alike remained concerned about Dubai’s credit situation. A default in their sovereign debt could send massive negative shockwaves across the international arena.
Earlier today, United Arab Emirates’ central bank said that it would bail out Dubai’s banks. This news could ease some of the markets’ worries which could then translate negatively on the yen at least on the short term.
Today (1:00 am GMT), BOJ Governor Masaaki Shirakawa is set to deliver a speech at the Meeting with Business Executives, in Nagoya. He could once again talk about the bank’s plan to intervene in the currencies markets. Last Friday, Finance Minister Hirohisa Fujii announced that Japan will do whatever it takes to stem the yen’s rise against the dollar. The yen could lose its support against the USD if the bank indeed intervenes in the market. This is highly probable given the JPY’s recent advance that was caused by Dubai’s default threat.
As global risk concerns faded, Yen pairs pulled out of their sharp dive and shifted to consolidation mode yesterday. The possibility of currency intervention, which was touched upon by BOJ Governor Shirakawa, prompted traders to cut back on their long Yen orders.
Shirakawa also mentioned that the central bank would take action to ensure economic stability, leading some to think that the nation’s recovery is starting to lose steam. Well, the latest economic reports seem to confirm those speculations and, last I heard, Japan is officially in deflation! Shirakawa did say that the BOJ would do its best to combat deflation by wielding their strongest monetary policy tools…
Meanwhile, average cash earnings for October fell by 1.7% year-on-year exactly as expected. This marks the 17th month in consecutive declines, implying that labor conditions still remain weak.
No economic reports are due from Japan today but watch out for the release of US pending home sales and ISM manufacturing PMI. Both are expected to fall back slightly from their previous readings, possibly spurring a run of risk aversion.
The yen surrendered some of its losses in yesterday’s trading session against most of its currency counterparts. The EURJPY, for instance, bounced from 130.00, which is a key support, to close at 130.77.
The BOJ decided to keep its interest rate at 0.10% again. The BOJ, however, bowed to the government’s pressure to fight the country’s deflation with a ¥10 trillion debt buying program which was increased from ¥1.8 trillion. Still, most economists think that such expansion is not enough to spur overall economic activity.
The JPY slid in anticipation that the BOJ would take some major steps to spur demand. The yen rebounded after the report as market participant deemed the bank’s action as minimum.
On a separate note, the confirmation that Dubai is renegotiating $26 billion of its debt instead of $60 billion eased concerns of a budding default. Confidence in the markets surfaced again with investors favoring equities over the relatively safer JPY and USD.
Later today, data regarding the ADP non-farm employment change will be released at 1:15 pm GMT. The change in the number of employed people in November is seen to be at -149,000, which is much better than October’s -203,000 count. A decrease in the account could spark risk appetite which would be bearish for the JPY.
Uh oh – yen in trouble! Despite the run of risk aversion that hit the markets during the US session, the yen fell against other majors on news of potential currency intervention. The USDJPY and EURJPY pairs rose to 87.39 and 131.50 respectively.
There are more and more concerns that Japan’s new government is seriously considering intervening in the markets. A close look at the current economic situation suggests that Japan has many reasons to want to intervene. For one, Japanese officials have said that yen cannot afford to keep on rising, as it will negatively affect potential exports. Remember my young padawans, a cheaper currency is more attractive to foreign importers.
Secondly, Japan is experiencing more and more deflationary fears. One way to combat deflation is to implement more quantitative easing measures. Oh wait, didn’t they do that earlier this week?? Well, I guess if they really try and hit deflation in the gut is to hit them with some currency [intervention](http://www.babypips.com/forexpedia/Intervention)!
Not much over the next few days, but as I type this, the yen is getting bullied in the Asian market. Could this be the theme for the rest of the week?
The yen got sliced up like a California roll in yesterdays trading session. Yen crosses continued to soar, as the EURJPY and GBPJPY closed higher at 132.98 and 146.09 respectively.
The yen has been slipping as of late on news that the [Bank of Japan](http://www.babypips.com/forexpedia/Bank_of_Japan) could take action by doing some currency intervention. As I said yesterday, there are fears that Japan will enter a deflationary spiral. This wouldn’t be a good way to start a new decade – isn’t it a little to be reminiscent of “the lost decade” of the 1990s?
One report that could provide the yen a boost is the US non-farm payrolls report. Historically, this report tends to have a major impact on the markets. Given how sentiment has been driving currency trading as of late, if this report comes in worse than expected and shows that job losses aren’t stabilizing, this could spark a run of risk aversion, which would benefit the USD and JPY. Of course, if the report prints that job losses are continuing to fall - projections are that job losses have dipped to 119,000 - investors and traders may just run away from the yen and look for higher yielding assets! In either case, be prepared for some major moves tonight!
The Yen bowed down to its safe-haven rival, the greenback, as the unexpectedly strong NFP report renewed demand for the US dollar. The USDJPY surged to the 90.00 area after the Fed gave the US dollar the carry trade advantage over the Yen.
Last week, the Fed pushed the cost of short-term loans in USD way below the cost of loans in JPY for the first time in more than 15 years. This allowed the greenback to overtake the Yen as the more preferred safe-haven currency. Also, BOJ’s announcement of an additional 10 trillion JPY in new lending caused the Yen to lose ground.
Today, Japan is set to release data on bank lending, money supply, and current account. Bank lending was up by 1.5% year-over-year in October and could print another rise this November. Meanwhile, Japan’s current account surplus is expected to widen from 1.34 trillion JPY to 1.59 trillion JPY this October. The actual figures are due 11:50 pm GMT.
On Tuesday, Japan’s Economy Watchers’ sentiment and leading index are due. The Economy Watchers’ sentiment is expected to slide down from 40.9 to 40.3, indicating growing pessimism concerning Japan’s economic outlook. Still, the leading index is expected to rise by 88.7%, following the previous 86.4% reading. Later on, Japan will release its final GDP reading, which is expecting a downward revision from 1.2% to 0.8% for the third quarter.
Data due Wednesday includes preliminary machine tool orders, core machinery orders, and corporate goods price index. On Friday, Japan has the household confidence report on tap.
Whew! Plenty of data from Japan this week. Let’s see whether these will enable the Yen to give the greenback a run for its money again…
The JPY fashioned a broad-based win against all the other major currencies yesterday. Note that Japan did not release any economic reports. The grand slam score, however, was sparked by some comments of the 2 most influential leaders in the world – ECB President Jean-Claude Trichet and Fed Chairman Ben Bernanke.
Trichet, yesterday, spoke at the “The Justice System in the Face of the Crisis,” conference, in Paris. In his speech he noted that the central bank’s present level of rates is just enough. He also said that the bank is ready to absorb the liquidity as the economy improves. Though, he likewise added that they will continue to provide banks with financing even for an extended period. While his speech generally sounded positive, the market took it as contra the euro. The euro slid against the USD and the JPY following his remarks.
During the US session, Bernanke also delivered a discourse at the Economic Club Luncheon, in Washington DC. There he mentioned that the US economy will still confront “significant headwinds” and that the inflation “could move lower.” US equities and commodities weakened while treasuries, the USD and the JPY gained immediately after his note.
Earlier today, data on Japan’s current account, bank lending and M2 money stock were reported. These accounts, however, do not have much impact on the yen’s valuation. In any case, Japan’s current account rose to ¥1.38 trillion from 1.34 trillion. The score was much lower than the ¥1.59 trillion consensus. Japan’s bank lending also slowed to 0.2% in November from 1.4% in the same manner as the country’s M2 money stock tapered to 3.3% from 3.4%.
Despite the bearish signals of the above reports, the yen still gained.
No top tier economic reports are due today in Japan. Like yesterday, the yen can be swayed by some economic events in the other economies. The BOC, for one, is expected to keep its rate unchanged at 0.25%. Leaving the rate as is could be bearish for the CADJPY.
Is it just me or do traders always find some reason to buy up the yen whenever it dips? For the second straight day, the yen managed to edge up strongly against its western counterparts. The currency was able to rally against the dollar, the pound and the euro.
Yesterday’s reason? Risk aversion and probably profit taking from last week’s yen sell-off. Global equities fell, which helped push the yen higher. The Japanese government also announced that they would commit another ¥100 billion in bonds to further stimulate Japan’s domestic economy.
The yen took a slight hit early today though, as the final version of its GDP report for the third quarter of this year showed that its economy only grew 0.3%, and not 1.2%. Still, the ugly GDP report wasn’t able to keep yen bulls at bay. They managed to buy up the yen quickly the initial selling frenzy died down.
The important economic data to watch from Japan today is the core machinery orders report for October at 11:50 pm GMT. The expectation is that orders dropped 4.4% October-on-September, opposite the 10.5% gain seen from the reporting period before. If the actual figures come out better-than-expected, we could see the yen be bought up again.
It was a good day for the yen yesterday, although it would have been great, had risk sentiment not picked up during the latter trading sessions. With risk sentiment seeming to pick up, will the yen continue to give up more of its recent gains today?
Late last night, core machinery orders data was released. The results were in line with expectations, showing that orders fell in October by 4.4%. It seems that companies are still trying to cut costs and are refraining from spending on machinery and equipment.
The yen has been gaining as of late on fears of credit downgrades in Europe, as well as on increased risk aversion due to the recent news that their economy did not grow as much as initially reported. Take note that the yen is highly affected by degrees of risk sentiment. With no high impact data coming out from Japan over the next couple of days, watch out for news that from other countries that could alter risk sentiment.