The yen was weaker yesterday and continues to weaken today. In a speech delivered in Zurich, Bank of Japan Governor Kuroda promised to continue with "powerful monetary easing" while remaining hopeful that inflation was on the horizon. According to Reuters, Kuroda indicated that the falling 'output gap' would eventually result in higher wages and prices. Kuroda's talk was similar to previous speeches, and all signs suggest that the status quo in Japanese monetary policy is set to continue. After weakening for the past two days, the outlook for the yen remains in neutral in the short-term. The currency continues to trade in a normal range, and does not look overbought or oversold.
USD/JPY is currently trading above 113.80. Looking at the euro vs. the yen, EUR/JPY is up sharply and is currently trading above 133.0.
This is a fairly slow week for economic data releases relating to the yen. Corporate Goods Price Index numbers were stronger versus expectations (3.4% vs. 3.1% expected). On Wednesday, we’ll see GDP growth and industrial production numbers. Finally on Thursday, we’ll see cross-border stock and bond investments. Last week, Japanese residents continued to buy foreign stocks and bonds.
As bullish momentum runs out of momentum and the yen trades sideways, we are downgrading the yen to neutral in the short-term. Note that the currency is now trading within normal conditions, 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 looking oversold based on various technical indicators. This is based on various technical indicators.