Today has been an eventful day for the Japanese yen, at least based on recent history. The yen is stronger today, and was much stronger earlier this morning. Looking at USD/JPY, the pair managed to break above the critical 114.50 threshold following comments from Bank of Japan Governor Kuroda. The governor signalled that easy monetary policies are likely to continue given weak inflation. The pair has since fallen below 114.50 and is currenly trading just above 114.40. Looking at political news, Trump is currently visiting Japan as part of his broader Asian tour. He is expected to visit South Korea tomorrow.
Looking at the euro vs. the yen, EUR/JPY is up slightly and is currently trading above 132.80.
Looking at the economic calendar for the yen, this week’s announcements include survey data, cross-border investment figures and a speech from the Bank of the Japan’s governor. On Monday, Governor Kuroda suggested that easy monetary policies will continue. Nikkei Services (53.4) and Composite PMIs (53.4) for October were both higher relative to previous figures. On Tuesday we’ll get labor cash earnings and real cash earnings. On Wednesday, we’ll see the leading index and the coincident index. Finally on Thursday, we’ll see the Eco Watchers Survey, Machine Orders, cross-border stock and bond investments and bank lending. Last week, retail sales missed expectations.
As bond yields continue to trade sideways, we are upgrading the yen to neutral in the short-term. Note that the currency is looking oversold, based on technical indicators on the daily chart.
After rising on lower global bond yields, we are upgrading the yen to neutral. Looking at the yen on a weekly chart, the currency is neither overbought or oversold levels looking at various technical indicators. Thus trading conditions remain normal.