The Japanese yen is mostly weaker today - the yen is currently the weakest against the US dollar and the British pound. Yesterday, the currency strengthened against all major currencies thanks to fears of rising US-Japan trade tensions. Prime Minister Abe is currently in Florida for a two-day summit with President Trump.
So far, the fear of Trump linking Japanese trade with regional security concerns has failed to pan out. Instead, risk sentiment is rebounding thanks to easing North Korea-related tensions. As we wrote in our US dollar daily update, a range of developments in the Korean peninsula is helping risk appetite. Looking at trade more specifically, Trump recently tweeted that he won't look at rejoining TPP talks as bilateral deals are "far more efficient". Earlier headlines suggested that the President was considering re-opening TPP discussions. While global trade tensions (particularly relating to US-China trade) continue to simmer in the background, the yen has managed to weaken since late March. 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 107.30. EUR/JPY is currently up slightly and trading above 132.50.
Looking at Japanese economic data this week, important data releases include the trade balance and inflation figures. YoY February industrial production (1.6% vs. 2.3% expected) missed consensus estimates while February capacity utilization (1.3% vs. -0.3% expected) was better than estimates. The adjusted trade balance for March (¥119.2b vs. -¥98.5b expected) was better than consensus estimates. Tomorrow, we’ll see foreign investment in Japanese equities and Japanese investment in foreign bonds. On Friday, the most important day, we’ll see the YoY national consumer price index for March. Last week, the Eco-Watcher Survey results were below consensus expectations.