Despite a stronger inflation number this morning, the Japanese Yen fell victim to Dollar, Euro and Swiss Franc strength. Once again, the Yen pairs have been moving in lockstep with the Dow as the stock markets intraday reversal leads to a reversal in USD/JPY. There is still a lot of Japanese economic data due out this week, most of which is expected to be Yen positive. We have the trade balance this evening.
The weakness of the Yen should drive strong exports throughout the month of March. We are also moving into Golden Week, which is a period that most Japanese take off for holidays. Over the past 10 years, USD/JPY either rallied in the week leading up to the holidays or the week of the holiday 6 out of the last 10 times. As for the other years, USD/JPY was unchanged in 2 out of the 4 remaining years and rallied in the other 2.