Despite a much stronger than expected Japanese trade surplus and yesterdays sharp rise in Corporate Service prices, the Japanese Yen is weaker across the board. The basis for this weakness has been the surge in the Dow. Over the past few months, the Japanese Yen has been moving in lockstep with the Dow as traders sell the Yen to fund their stock purchases.
Although this could continue for another night, we expect Japanese data to prevail as the primary driver of Yen fluctuations on Thursday, when we have no less than 8 pieces of key economic data due for release, including the Bank of Japans rate decision and the release of their semi-annual economic outlook. We expect the weak Yen to have as beneficial impacts on the economy as it has for companies like Toyota.