The Japanese yen is lower against all major currencies today. The yen is the weakest against the Australian dollar, the euro and the Canadian dollar. Yesterday, the yen strengthened as equity and commodity markets sold off during US trading hours. As a safe haven asset, the yen tends to strengthen during downturns.
Turning to news, several local governments in Japan have criticized the central government's handling of the Moritomo school scandal. So far, seven local governments have issued nonbinding statements of opinion regarding the process according to Japan Times. While support for Abe is rebounding, the scandal is likely to weigh on his cabinet for the foreseeable future. As risk sentiment, political stability and economic data all head south, the yen looks set to keep strengthening. Our short-term outlook on the yen is now neutral, while our medium-term outlook on the yen remains bullish.
USD/JPY is currently trading above 106.0. EUR/JPY is currently up and trading below 130.70.
Looking at Japanese economic data this week, we’ll see sentiment surveys and cross-border investment data. The Tankan large manufacturing outlook (24 vs. 25 expected) missed consensus estimates while Nikkei manufacturing PMIs (53.1 vs. 52.9 expected) were ahead of expectations. Tomorrow, we’ll see Nikkei services PMIs. On Thursday, we’ll see foreign investments in Japanese stocks and foreign bond investments by Japanese investors. On Friday, we’ll see household spending, and the leading economic index. Sentiment data from Japan has been decelerating this year. Last week, retail sales missed expectations.