JPY Daily Updates

16 July 2018

The Japanese yen is currently weakening against all major currencies. Last week, the yen sold off against the US dollar following rising US producer and consumer price index figures. As US growth and inflation continues to accelerate, risk sentiment is improving accordingly. Note that last week’s move down was accompanied by relatively higher trading volumes. This is a sign that bears remain in control. The yen remains particularly weak against the dollar. Today’s USD/JPY trading range is 111.10 – 112.80.

Looking at recent developments, the yen is trading as a function of positive global risk sentiment. The S&P 500 index has rallied over the past few days, and has recently hit a five-month high. As the equity market is a good barometer of risk appetite, the recent move up in the S&P 500 suggests a corresponding increase in risk appetite over a bid for safety.

Looking at the yen more broadly, recent Japanese economic data has been surprisingly strong. While year-over-year Japanese growth peaked in the fourth quarter of last year, recent data such as industrial production growth has accelerated relative to previous monthly figures. Given its safe haven characteristics, the yen tends to weaken in response to improving domestic data. Our outlook on the Japanese yen remains bearish.

USD/JPY is currently trading above 112.40. EUR/JPY is higher, trading above 131.40. GBP/JPY is also higher as it trades above 148.90.

Date Event Actual Previous
July 19 Balance of Trade JUN -¥578B
July 20 Inflation Rate YoY JUN 0.7%
July 20 Core Inflation Rate YoY JUN 0.7%
July 20 Inflation Rate Ex-Food and Energy YoY JUN 0.3%
July 20 Foreign Bond Investment 14/JUL ¥817.9B
July 20 Stock Investment by Foreigners 14/JUL ¥74.3B