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Japanese yen selling off again despite falling bond yields

Japanese yen daily update

BY DEB SHAW | 

Japanese yen daily update

The Japanese yen is once again lower against all major currencies today. The yen is currently the weakest against the US dollar and the Canadian dollar. Yesterday, the yen sold off sharply, particularly against the US dollar. USD/JPY rose by more than one yen to 108+. Thanks to rising bond yields, the yen is weakening alongside negative interest rate currencies such as the Swiss franc.  

Turning to recent news and data, Bank of Japan Governor Kuroda said that he expected inflation to rise to 2% within the next five years in an interview with  CNBC. He also said that monetary policy is set to remain accommodative, despite good global growth. He also stated that the Bank of Japan does not manipulate its currency, and that the "Japanese yen, from time to time, appreciate[s] too much." Turning to economic data, Japan's leading economic index was ahead of expectations and was slightly higher than previous monthly figures. Despite an ongoing slowdown across Asia, recent figures suggest some hope for continued growth. Following recent weakness, we will downgrade our short-term outlook on the yen to bearish and our medium-term outlook on the yen to neutral later today.  

USD/JPY is currently trading above 108.80. EUR/JPY is currently up slightly and trading above 132.80.

Looking at Japanese economic data and events this week, the Bank of Japan’s upcoming meeting will be watched closely. The March Nikkei manufacturing PMI (53.3 vs. 52.6 expected) was ahead of expectations. The leading economic index for February (106 vs. 105.8 expected) was ahead of expectations. Tomorrow, we'll see the All Industry Activity Index for February. On Thursday, we’ll see foreign investment in Japanese equities and Japanese investment in foreign bonds. On Friday, the most important day, we’ll get the latest interest rate decision from the Bank of Japan, its outlook report and a press conference. We’ll also see the Tokyo consumer price index for April, the unemployment rate for March and March household spending. Finally, we’ll get March industrial production, and March retail sales, and March housing starts.

Updated 
Short term outlook
Bearish
Medium term outlook
Bearish

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