JPY Forex-Archive

Daily Economic News - Jan 13, 2008

Yesterday BoJ Deputy Governor Muto spoke on the state of the Japanese economy and his speech undertook a dovish tone. Muto indicated that the Economy will remain pressured for some time as a result of the global credit crisis, however the Japanese economy is steadfast and expected to maintain its growth although it is likely to be mild.

The JPY buyers will need to wait for next week as Core Machinery Orders, which measures the total value of new orders placed with machine manufacturers excluding orders for items with a volatile sales cycle, and the Tertiary Industry Activity Index, which measures the change in spending for services, will be released and is expected to give the JPY traders an indication of how the local economy is handling the credit crisis.

Daily Economic News - Jan 10, 2008

The JPY finished Tuesday trading down against all 16 major currencies, amidst rising foreign investment by Japanese investors. These investors continue to look for more high-yielding assets as the Dow continues to fall.

With the record gold bullion numbers reached yesterday, as well as the easing of Crude Oil prices, many investors borrowed from the low-yielding Asian currency to purchase lucrative commodities.

The currency should continue to weaken against its Western counterpart's as there looks to be no change ahead, regarding Japan's benchmark interest rate. The JPY found itself trading at just under 260.50 versus the Euro, as well as 109 versus the dollar. Any thought of an interest rate hike, will likely be thwarted by rising concern in the overall health of the Japanese economy.

The JPY continues to be absent from this week's economic calendar. Look toward the Dow as well as commodity prices to define the direction of the Asian powerhouse.

Daily Economic News - Jan 9, 2008

Most Asian shares edged up today as oil prices recovered from steep falls the prior day; however Japan's Nikkei earlier hit an 18-month low as investor worries about a recession in the United States persisted. It seems that the Japanese economy is shaky as a possible US recession is possible, and investors are seeking for less risky investment alternative to put their money in. This Thursday the Leading Index is due to be out as this indicator forecasted to decrease to 10.0% compared to last month 18.2% which reflects the slowdown in the local economy. This indicator measures overall economic health by combining ten leading indicators including average weekly hours, new orders, consumer expectations, housing permits, stock prices, and interest rate spreads.

The weak USD is hurting the Japanese economy as world importers prefer US goods instead of the Japanese goods thanks to the low cost which are caused by the weak greenback.

Daily Economic News - Jan 6, 2008

The JPY continued its bullish surge yesterday, driven mainly by the sharp global carry trade unwind. It reached a five-week high against the EUR and US dollar and it has been one of the biggest gainers among major currencies in the last few days. Based on Weak U.S. data, as well as reports on Wednesday of reduction in the manufacturing sector during the month of December, many investors around the world began shifting chancy assets due to uncertainties concerning the impact of the sluggish U.S. economy over the global development. This caused a sharp carry trade unwind which has not relented since then. Carry trades involve selling low-yielding currencies like the yen to invest in higher-yielding currencies. Therefore declines in overseas equities markets since last week have driven a massive carry trade unwind and hence given a boost up to the JPY, which hit a 17-month high against the sterling at 213.54 yen on Thursday. In addition, yesterday the JPY strengthened to as high as 108.25 per US dollar, a point which has not been seen since November 27. The Nikkei was down 3.5 percent at 14,771.85, it's lowest since Nov. 22, and the broader TOPIX index was down 3.2 percent. The strong correlation between falling equities and a strengthening JPY indicates that the short term direction of the JPY will heavily depend on the performance of global stocks combined with the level of risk investors are willing to take.

Daily Economic News - Jan 3, 2008

The Japanese banking system will be closed till Friday and therefore low liquidity is expected in the Japanese pairs. The yen fell as a report showing manufacturing expanded in Australia encouraged traders to buy higher-yielding assets with money borrowed in Japan in so-called carry trades as we expect that carry trades indeed would be the favorite's alternative for now. In 2008 we are expected to see the JPY still being traded in the same levels at least till the mid range; however as in the start of the third quarter we expect the USD/JPY carry trade to be more attractive as the greenback forecasted to comeback to its last year's values.