The Japanese yen ended Friday down versus most of the majors as traders sought out risky assets, as indicated by the nearly 2 percent surge in the Dow Jones Industrial Average and sell-offs in global government bonds, which are typically “safe haven” assets.
In fact, 2-year Treasury yields surged 15bps while 10-year German Bund yields jumped 10bps. As usual, the moves in the Japanese yen had little to do with Japanese fundamentals, and instead depended much more on broad risk appetite. This should continue to be the case next week even though there will be heavy event risk on hand. On Monday, Bank of Japan Governor Shirakawa will speak, and given the risk of recession in the country, traders will be looking for indications that he is considering reducing interest rates. On Thursday, Japanese CPI, the jobless rate, and retail trade numbers will all hit the wires. The inflation numbers may not influence price action too much, but the indicator should be watched as the headline index is anticipated to hit decade highs due to energy and food costs, while the core measure may barely reflect positive price growth. Indeed, once commodity prices start to fall back again, the Japanese economy will once again face the threat of deflation.
[B]**Want to know what happened in the rest of the majors or view technical support/resistance levels? Check out the [/B][B]Daily Fundamentals[/B][B] in its entirety.[/B]