Japanese yen up slightly following recent weakness

Japanese yen daily update


Japanese yen daily update

The Japanese yen is mostly stronger today. Looking at the yen against major peers, the currency is the strongest against the Canadian dollar and the British pound. Yesterday, the yen weakened sharply thanks to rebounding risk appetite. In the last 24 hours, riskier assets such as equities and commodities have fared well. Today, the currency appears to be reversing course. Turning to news from Japan, Bank of Japan Governor Kuroda has been speaking at a confirmation hearing. In a message to the Diet (Japan's parliament), Kuroda claimed that there is no plan to abandon negative rates and monetary easing unless inflation reaches the central bank's goal of 2%. Last week, Kuroda shocked markets by suggesting it may consider exiting monetary stimulus by 2019. Today, Kuroda appears to be backtracking on his comments. Despite his recent remarks, the yen continues to strengthen. Our short-term and medium-term outlook on the yen remains bullish.   

USD/JPY is currently trading above 106.0. EUR/JPY is currently down and trading above 130.80.

Looking at Japanese economic data this week, we'll see Q4 GDP figures and hear from the Bank of Japan. Markit services PMIs missed expectations (51.7 vs. 52 expected). Tomorrow, we'll see the leading economic index. On Thursday, the most important day, we'll see cross-border stock and bond investments. More importantly, we'll see Q4 GDP growth figures. We'll also see the trade balance and the Eco-Watchers survey. On Friday, we'll see inflation for January. Governor Kuroda will deliver his monetary policy statement at the upcoming BoJ meeting. No changes to interest rates are expected. Last week, manufacturing PMIs remained healthy while industrial production contracted.