Although economic data was positive for the day, it seemed that mild profit taking helped the yen gain footing against the greenback not a shift to bullish sentiment. However, there was plenty to be bullish about. Department store sales in both Tokyo and Nationwide improved in the month of May, reversing more negative figures for the previous month.
Granted, the improvements didn?t necessarily reflect stronger consumption by domestic citizens, however, it did signal a potential pickup in spending in the summer months to come. Additionally, Japanese business confidence was also improved. Hitting a five month high in June, business confidence advanced as economic growth and a depreciated yen helped to boost the formidable export sector. The recent sentiment was reflected in the monthly Tankan survey (not to be confused with the quarterly government report) released by Reuters. Although smaller in scope, the positive results are likely to lead to an improved quarterly assessment by the Bank of Japan set for release on July 2nd. Incidentally, the underlying yen did receive a boost from concerns over comments made by Governor Fukui in the overnight session. Noting that he is constantly monitoring risks in the market, Fukui noted that excessive risk positioning in the market could lead to a sharp sell off. Obviously targeting the now famed carry trade, speculators pared back on some positioning on liquidity concerns.