JPY Forex-Archive
Daily Economic News - Mar 31, 2008
The JPY spent most of last week range trading with most of its crosses, as the week's dominant news came from outside of Japan. Early week concerns regarding the Dollar, sent most currencies on a bullish trend versus the greenback, the JPY stayed put, even dropping off a bit. Largely due to a turn in carry trading, the pair peaked above 100 for a short while before correcting back to the key 99 support level. Toward the end of the week, a set of Japanese data mapped out what could be an important week for the JPY. Friday, Unemployment figures were the highest in over 4 months and retail sales dropped enough to erase gains the JPY made before the weekend.
This week the JPY has a busy week, as we will see a full batch of Japanese economic data. Manufacturing PMI, and Labor Earnings are expected later this week along with the all important Tankan Manufacturing Index. The index, which measures the general business conditions of large manufacturers, is one of the more volatile Japanese events on its calendar. The figure is scheduled for release today at 23:50 GMT and is forecasted to see a 6 point drop off from last month's number.
Earlier today, Industrial Production numbers were released. Though production dropped by -1.2% the figure was up from its forecasted 2.2% drop and added little to market volatility.
As we still await the appointment of a new Bank of Japan Governor, it is safe to say that the JPY will stay focused and keep within a range similar to that of last week.
Daily Economic News - Mar 28, 2008
The JPY fell yesterday against most of the major currencies, as the increase in U.S. Consumer Spending encouraged traders to venture back into buying higher- yielding assets funded by cheap loans in Japan. The JPY traded at 99.63, following a gain of 0.5% against the USD. Manufacturers are beginning to feel the affects of a strong Yen and U.S. downturn. Confidence among Japanese manufacturers in the first quarter fell to -12.9 from 5.2 the prior quarter, the lowest levels in 4 years. According to the Ministry of Internal Affairs, the Japanese Core Consumer Price index rose 1.0% in February. The result marked the fifth straight month of gains. The data reflect rising prices for imported oil and commodities, putting upward pressure on living expenses in Japan. Record high Gold and Oil prices are the main reason behind the inflationary fears.The BoJ which has attempted to maintain a policy of steady rate increases, have found themselves facing pressures to cut rates in the near term. The clear issue for the central bank in cutting rates is the fear of rising inflation. There is no real market moving news to be released from the Japanese markets today. As speculation grows for a potential BoJ rate cut, the USD/JPY will continue to generate support for dollar bulls.Daily Economic News - Mar 27, 2008
Yesterday was a relatively quiet day for the JPY, though it did see steady growth throughout the day. With steady gains primarily against the Dollar, much of the Yen's bullish movement could be contributed to the repatriation of overseas earnings by Japanese companies into the local economy. To be more specific, it meant the selling off of Dollars and Euro to buy back Yen. This had a positive affect on major JPY currency pairings, as the rising turmoil in the market is leading to more investment in the Japanese currency. Early Wednesday saw the release of the Japanese Trade Balance which was announced at 0.60 Trillion Yen, a sharp drop off from last month's 0.86 Trillion Yen surplus. These numbers should continue as the JPY rises in value versus the major currencies. If the JPY should continue its growth, concern will surface as the export-heavy nation will see a hit in their strongest economic sector. What is still missing from Japan's economic outlook is a leader who can map out a clear cut strategy for the future. Inflationary pressure has begun to deteriorate but can very easily reappear if investors lose confidence in the interim governing of the Japanese economy. Today is an especially heavy news day for the Japanese economy, as we can expect a batch of data from the Eastern giant toward the end of the day. Core CPI, Core Tokyo CPI, Overall Household Spending, Japanese Unemployment Rate, Retail Sales and Large Retailers' Sales are all on tap, and are all expected to see positive results. Retail sales should see the biggest jump and could heavily contribute to overnight bullish behavior by the JPY.Daily Economic News - Mar 26, 2008
The JPY had a day of mixed results yesterday. The most commonly traded JPY pair, USD/JPY fell back toward the key level of 100 as that and the CAD/JPY were the only two JPY pairs or crosses to see negative days. All other JPY crosses were positively traded. Yesterday's economic data was not really relevant to JPY movement and as such kept the currency quiet in the overnight session. What has become worrying is the cautionary stance of the Bank of Japan (BoJ) lately. It was only several weeks ago, where the world was predicting a boom in the Japanese economy. Now as a result of market uncertainty and the absence of a permanent Governor of the BoJ, the outlook in Japan has taken on an uncertain tone. BoJ Deputy Governor Kiyohiko Nishimura reiterated yesterday that the goal of the BoJ is to boost consumption; where as interim Governor Masaaki Shirakawa expressed the downsides to Japanese growth. The uncertain future in Japan has only been magnified now that the global market place is in such a volatile state. What we should expect more of is a shaping of the new Japanese economic policy as they continue their search for a leader of the Bank of Japan. Expect the JPY to continue in its current trend during today's trading sessions.Daily Economic News - Mar 25, 2008
Eight of the 10 most-traded Asian currencies outside Japan climbed as demand for higher-yielding assets increased after sales of existing homes in the U.S. unexpectedly rose last month and after JP Morgan raised its bid for Bear Stearns Cos. It appears that The consistent cuts in the US interest rate have diminished the carry trade cycles to a non existing status. The JPY reacted relatively softly in relation to other currencies as the USD/JPY dropped less than 80 pips, whereas most of the other currencies appreciated much more against the USD. There are two events expected to come from Japan, as both are considered to have moderate importance and effect on price movements. The first one is the Corporate Services Price Index (CSPI) which measures the rate of inflation experienced by corporations when purchasing services, and has a forecast of 0.7%. The second event and the slightly more important one is the Japanese Trade Balance which has a forecast of 0.77T and a previous release of 0.86T. It appears that the JPY will continue to gain today, especially on the back of the struggling US economy, and the stable Japanese monetary policy.Daily Economic News - Mar 24, 2008
The JPY stopped gaining ground last week due to positive figures released from the US. The Japanese currency was forced into a losing trend against the greenback, like most of the major traded currencies, with the Fed's announcement of the new 2.25% interest rate. Carry trades halted and the JPY fell from its 12 year record seen at the beginning of last week. However, while the other currencies influenced by the greenback recovery stayed flat, the JPY continued to gain ground against the EUR and GBP and a basket of other currencies. The JPY has become hard to predict for analysts, as the general global market has proven difficult to understand lately. It is safe to say that Japan, the world's second largest exporter will be the country whose currency is most affected by the global economic outlook over the next few weeks, as it tries to maintain some stability in this uncertain time. This week, the yearly Core CPI and the yearly Retail Sales are due for release. The core CPI is forecasted to rise to 0.9% showing an expected increase in the nation's inflation. The yearly retail sales report is forecasted to show a reading of 2.1% which is a step up from the last reading of 1.3%. This rise shows that people in Japan are buying more goods, which feed the worries of stagflation. The Japanese economy and the JPY were extremely sensitive last week to global economic news and should be no different this week as traders should follow news coming from the US in particular.Daily Economic News - Mar 21, 2008
The JPY is currently being held hostage by world markets, as movement in the currency, has been solely attributed to the volatile world markets. This week we have seen stock markets around the world make gains and losses of remarkable proportion. The Dow Jones, alone has swung 200+ points in either direction throughout the week, leaving carry traders flummoxed. There seems to have been a distinctive split in JPY related currency pairs, as USD/JPY and GBP/JPY both saw gains yesterday while the rest of the JPY crosses all saw losses. The overall assumption amongst traders is that carry trades will continue to suffer as the world markets show no signs of stabilizing, which provides the currency market with enough volatility to shy investors away from JPY trading. As if market nervousness wasn't enough to throw off JPY progression, the Japanese economy now finds itself in the odd position of having no leader. The Bank of Japan (BoJ) was set to name a new governor as then current Governor Fukui was to finish his term., but the Japanese government has still not found one. So, for the first time since WWII, the Japanese economy's highest position is vacant. Since Fukui stepped down the management of the Japanese economy and its prided JPY have been left to interim Governor Shirakawa and Deputy Governor Nishimura. Japanese investors have linked this issue to the reasoning behind the sudden stop in JPY progression. News outlets have reported that the position should be filled before April's World Finance meeting in Washington D.C. Next week, holds several key economic events for the JPY in the retail and production sectors. Still, we should see JPY prices dominated mostly by the movement of global markets.Daily Economic News - Mar 19, 2008
Yesterday, Asian markets saw a steady rise on the back of the US Interest Rate cut. Scheduled economic figures from Japan were limited to the All Industries Activity Index yesterday. This had little to no impact on JPY behavior. JPY movement was dominated by the bullish greenback as it slipped all across the board, against all traded currencies. The JPY lost 3% of its value against the USD and the GBP and 2% of its value against the EUR and the AUD. The 75pts cut in the key interest of the US encouraged investors to re-enter risky carry trades funded by cheap borrowing in the JPY as well as going long with the USD/JPY, EUR/JPY, and GBP/JPY pairs. Today, BoJ Governor Fukui is expected to give a speech at 10:00 GMT in Tokyo. Forex traders should expect to see some indication regarding the BoJ economic policy for the near future. The JPY is expected to continue to be extremely sensitive in relation to the USD behavior. Toshihiko Fukui's five-year term set to expire on Wednesday. The Japanese government is set to present a new nominee, though there should not be much change in the overall outlook of Japanese economic policy. Today will be an interesting one for the JPY as it will be pulled between bearish behavior in the Forex market and bullish behavior in the stock market; it is safe to say that range trading should be expected.Daily Economic News - Mar 18, 2008
The JPY rallied against the greenback to its highest level since September 1995 on the back of the unexpected discount rate cut and the Bear Stearns turmoil. The credit crisis has hit the U.S financial markets hard and it has been accompanied by high currency volatility and monetary expansion. As a result risk aversion has a strangle hold over investor sentiment and therefore carry trades should continue to unwind. The only concern for the JPY rally is intervention by the BoJ, which has expressed concerns regarding the recent sharp currency movements. However analysts believe that the BoJ is highly unlikely to intervene before the JPY breaches the 95.00 level against the greenback. Therefore the near term outlook for the JPY is still very much bullish and it should be able to further extend its gains today ahead of the FOMC meeting which will cause some market jitters and result in more suffering for carry trades.Daily Economic News - Mar 17, 2008
The JPY rallied to below the 100.00 level versus the greenback on the back of the Bear Sterns saga which raised further credit turmoil concerns. Investors now fear that there is a systematic problem in the U.S banking sector and these concerns are causing carry trades to unwind sharply as risky positions are being pared. Therefore the JPY has been on a sharp upward rally, in particular against the high yielding and emerging market currencies. Earlier today, during the beginning session of Asian trading the JPY rallied to as high as 95.75 versus the greenback, a level not seen since September 1995, down sharply from 99.18 in New York late Friday. Also earlier today the Japanese Finance Minister Nukaga voiced concern about the JPY's spike to 12-year highs against the dollar, stating that the surge was excessive. Investors are worried that the stronger JPY will hurt Japan's export-led economic recovery and undermine corporate earnings. The JPY should be able to maintain its bullish momentum over the longer term but as soon as the Fed begins to restore confidence in the U.S economy, we will see the JPY rampage ease off sharply. After peaking earlier on today we expect the JPY to lose some of its gained ground later on as the market cools and learns to adapt to yesterday's emergency rate cut by the Fed. However the near term outlook for the JPY remains very much bullish as a U.S economic redemption is highly unlikely to occur anytime soon and recession fears will continue to drive risk aversion.Daily Economic News - Mar 14, 2008
The JPY was the biggest beneficiary of this week, for the first time since 1995 the U.S. dollar fell bellow 100 Japanese yen. Risk aversion has dominated and we've seen the carry trade unwind on credit-market concerns. The Japanese currency rose 10% against the USD during this month and hit a 1.5 years high on as fears of wider credit-related losses at U.S. financial firms dulled investor's appetite for risk, thereby causing an unwinding of carry trades. The JPY is now being traded at 100.60 level and we estimate that if the Yen will break below 100 it would probably continue to 98.00 before heading up again. By now, falling house prices and high energy costs had pushed the U.S. consumer confidence to its lowest. Fear is predominant in the market that the worst is not behind. As a result, all risk is being liquidated and the JPY is benefitting tremendously from the resulting carry trade unwind. As it stands today, the JPY should continue its bullish rampage against the high yielders and as long as investors continue to seek a safe haven, the outlook for the JPY will remain bright.Daily Economic News - Mar 13, 2008
Yesterday, The JPY hit a 12 year high against the greenback. The JPY appreciated sharply as investors reassessed the effectiveness of the Federal Reserve's 200 billion dollar rescue plan for ailing financial markets as the USD/JPY pair reached 101.10, a level unseen since December 1995. The dollar's fall against the JPY triggered a swift unwinding of Carry Trades. The USD/JPY is now consistently approaching the key 100 support level we have discussed over the last few weeks, as investors are still unsure if the BoJ will try to intervene in the market. Yesterday, the Household Confidence report came in at its lowest level in nearly five years on worries of deteriorating economic condition in the labor market. The consumer confidence index also fell to 36.1 in February, its lowest level since March 2003. Today, the Industrial Production figures are expected, and are currently forecasting identical results from last month 0.2% drop. No other indicators are expected to be released from Japan today. Investors should look toward global news, to chart JPY movement.Daily Economic News - Mar 12, 2008
The JPY slipped all across the board yesterday, in particular against the high yielders and coming off an eight-year high against the dollar as a sharp rally in U.S. stocks encouraged investors to re-enter risky carry trades funded by cheap borrowing in the Japanese currency. U.S stocks leaped upwards yesterday and the DJIA gained nearly 300 points after the Federal Reserve said it will expand its securities lending program to loan up to $200 billion of Treasury securities. The Fed also said it will lend the Treasuries for 28 days instead of overnight and will increase currency swap lines with the European Central Bank and the Swiss National Bank. If the freshly surfaced “risk appetite” among investors is able to hold out as the market digest yesterday's news, then the JPY will continue to depreciate at rather rapid rate. However most analysts believe that the rally in U.S stocks will be short lived as yesterday's Fed announcement is still not a solution for the deteriorating housing market. Therefore the JPY should begin to claw back some lost ground today as the market comes to this realization and carry trades ease off.Daily Economic News - Mar 11, 2008
The JPY was one of the few currencies to strengthen against the greenback yesterday as U.S stocks fell on the back of increased recession fears. The JPY traded near an eight-year high against the greenback as widening losses in credit markets prompted investors to trim holdings of higher-yielding assets funded by loans in Japan. The JPY will continue to appreciate against the greenback for as long as “risk phobia” maintains its stranglehold over investors. Also positive Japanese news ensured that the JPY remained well supported as Private Sector Machinery Orders unexpectedly surged a seasonally-adjusted 19.6% in January from the previous month, the fastest gain since August 2000. The JPY will now head towards the $100.00 level and although Japanese corporations are suffering, according to the latest Tankan Survey, it is unlikely that the BoJ will intervene.
Daily Economic News - Mar 10, 2008
The JPY begins this new week in prime position to make gains against a basket of its most commonly traded currencies. The JPY has consistently risen over the last week or so against the dollar coming ever so close to that 100 support level. Currently floating in and around the 102 support level, the JPY saw eight-year highs last week as the USD/JPY pair grazed 101.40. As we stated several times last week, the 100 support level for the USD/JPY has a historical background to it. Only once in the last twenty years has the pair breached that level, when it dipped close to 85 in 1995. Immediately following that drop, the pair spring-boarded above the 100 level making significant strides and taking many investors with it. What holds to be different this time around is the assumption that the BoJ will not adjust or tweak any policy regarding currency markets. Japanese Finance Minister Nukaga reiterated that Japan would watch the currency “carefully” but take no outright action to prevent a strengthening in the JPY.
It has been the stance of the BoJ in recent history to create an identity for itself, and not to be so dependent on news from around the globe to move its currency. The main focus is on Asian growth to limit the effects of the current economic movement in the US. Projections see a rise in a host of economic sectors in Japan, coupled with the financial boost China should see from the Olympics, and the mending relationships between North and South Korea; Asian growth is imminent if not already here. Yesterday proved how much potential the Asian giant has, as the release of Core Machinery Orders came back almost 15% higher than expectations. The index which measures the total value of new orders placed with machine manufacturers, excluding orders for items with volatile sales rose 19.6% in January, as a rising figure in this index has a positive affect on the nation's currency
With investors predicting close to a 1.5% increase in the Japanese economy in 2008, the likelihood of state intervention causing the JPY to weaken, is not likely. Countries intervene in the buying and selling of foreign currency to affect exchange rates, however it should be noted that this is done in only dire circumstances.
Looking ahead to the economic calendar for Japan, this week should provide several indicators as to the rate at which the Japanese economy is growing. GDP, CGPI, Household Confidence, Current Account and Industrial Production are all expected to be released. If these figures return with similar positive results to that of the Machine Orders, expect a breach of the 100 USD/JPY level to come sooner than later. With rising confidence in independent growth and the weakening state of the dollar, investing long term on JPY growth would be wise.
Daily Economic News - Mar 06, 2008
In direct response to a boost in stocks on Wall Street, the JPY successfully gained against a basket of its crosses yesterday. The JPY has been the beneficiary of dollar woes lately, however now it is beginning to take its toll on the Japanese business sector. A large group of Japanese businesses are now losing significant profit due to low USD prices against the Yen. A major source of the Japanese income comes from import/export relationships with the US. Low dollar prices have forced Non-US manufacturers to lower prices in order to facilitate the needs of the worlds biggest consumer market.
Yesterday saw no news from the Japanese economy, as the currency moved according to world news events. Amongst, the big currencies, only the EUR has performed with real consistency lately, however the Yen is slowly showing its rejuvenation as investors expect Japanese growth to continue throughout 2008.
Today we are slated to see the release of Leading Index and Machine Tool Orders. The two are not expected to contribute much to the movement of JPY, as most JPY enthusiasts will stay tuned to stock prices and EUR and USD news.
As we await words from BoJ Governor Fukui on Friday regarding the outlook of the Japanese economy, expect the JPY to range trade throughout the day.
Daily Economic News - Mar 05, 2008
The JPY strengthened slightly against the greenback yesterday on the back of Bernanke's negative U.S housing outlook and recommendation of active policy in order to stabilize the sector. However it lost some of these earlier gains towards the end of the European trading session. Many analysts believe that the JPY will breach the 100.00 level against the greenback in the near term. The main reason for this is because the JPY is benefiting from risk aversion, which is a product of weakness in the equity markets across the globe. Another reason for the rosy JPY outlook is the fact that there is developing now a substantial interest rate compression between the USD and the JPY. Therefore the USDJPY has lost the status as the “King” of the carry trades, leading to a sharp depreciation of this pair. The only news released out of Japan earlier today during the Asian trading session was the Capital Spending figure, which measures the total amount of new capital expenditures by private businesses. This figure surprised on the downside releasing at -7.7%, which was well below the forecasted figure of -2.4%. However it did not have any effect on the Japanese currency which is mainly affected by risk sentiment.
Daily Economic News - Mar 04, 2008
The JPY breached below the 103.00 level against the USD, and reached 102.62 for the first time since 2005 after the ISM report showed that the U.S. manufacturing contracted once again. The Yen also gained on the back of stronger Japanese economic data. Yesterday's Japanese Average Cash Earnings, an indicator which measures the monthly change in the wages paid to jobholders, jumped 1% in the month of January which suggests that the Japanese economy may be accelerating. The JPY gained against about a dozen of the most traded currencies as Credit Market losses prompted investors to reduce holdings of higher yielding assets financed with loans from Japan, a strategy called the Carry Trade. The rapid upward movement in the JPY against the USD is fueling speculation of a breach to the key 100.00 level for the first time since 1995. At the mid term, we believe that the combination of deteriorating U.S. data and a speeding up in the Japanese economy, may indeed deliver such a result. As for the short term forecast, today's Japanese economic calendar will be quite empty with only Capital Spending data due to be released. This quarterly indicator measures the total amount of new capital expenditures by private businesses. The market is expecting a low release, signaling less business investments during the last quarter; however it is expected to generate relatively small interest in the market. Today, there probably will not be too much volatility in the wake of Friday's Interest Rate Announcement and the BoJ Monthly Report. The JPY looks prime for another day of range trading.
Daily Economic News - Mar 03, 2008
The trading week opened today with the JPY gaining against most of the traded currencies. At 7:00 GMT, The JPY obtained a fresh three-year high against the USD as it traded at 102.90 JPY. The JPY also gained 0.55% against the EUR and 0.92% against the GBP. The JPY rally against the USD is mainly a result of the growing worries about the health of the US economy after dismal reports from last week's U.S economic session which showed the sharp impact of the credit crisis.
We are nearing a key support level in the USD/JPY of 100. History has shown us that upon approaching this level the currency pair springs back up to make significant gains. Not since the mid-90's have we seen the support level broken, and even then it was short lived.
Last Thursday there was a surprising increase in the Japanese consumer spending and rising consumer prices. Those positive indicators assisted in the JPY's bullish behavior. The assumption behind most investors is that the Japanese economy is growing at a steady pace and will continue to do so for most of 2008. Today, as a result of those positive figures from last week, The Japanese currency is likely to remain bullish. There is no important economic news expected to be released in Japan, however, today should see active JPY trading in response to key U.S and Euro-zone data releases.
