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Japanese yen gives up recent gains as risk-on trades falter

Japanese yen daily update

BY DEB SHAW | 

Japanese yen daily update

The Japanese yen is mostly higher today - the yen is currently the strongest against the Australian dollar, the Canadian dollar and the US dollar. Note that the currency is mostly weaker against the euro and the British pound. Yesterday, the currency weakened as fears of a trade war fell after a speech by Chinese President Xi. Today, the yen is reversing course as "risk-on" trades stop making money. 

Looking at news, Prime Minister Abe is now involved in another cronyism scandal according to  Nikkei Asian Review. Following the Moritomo scandal, the Japanese media is reporting that one of Abe's former aides intervened in order to help a friend win regulatory approvals to set up a new veterinary school. Support for Abe's cabinet has been waning in recent weeks. Turning to economic data, year-over-year machinery orders and corporate goods prices decelerated from the previous year. After peaking in early 2018, Japanese economic data continues to weaken. Our short-term outlook on the yen is neutral, while our medium-term outlook on the yen remains bullish.  

USD/JPY is currently trading above 107.0. EUR/JPY is currently up slightly and trading above 132.470.

Looking at Japanese economic data this week, traders will be watching sentiment and machinery orders. The current account for February was slightly below expectations (¥2,076.0b vs. ¥2,160.0b expected). The Eco-Watchers survey (outlook) for March was also below expectations (49.6 vs. 51.5 expected). Machinery orders for March (2.4% vs 0% expected) was ahead of consensus estimates but decelerated from previous figures. Tomorrow, we'll see cross-border stock and bond investments. Last week, the Tankan large manufacturing survey missed expectations. 

Updated