Despite the US House passing the tax bill in last night's vote, the yen failed to weaken meaningfully. Instead, the yen is broadly stronger this morning, especially against the US dollar. Special Counsel Robert Mueller subpoenaed President Donald Trump’s campaign for documents containing specified Russian keywords according to Reuters. As the issue of Russian interference resurfaces in Washington, there are growing doubts regarding Trump's ability to get tax cuts through Congress. Our outlook on the yen remains neutral.
USD/JPY is currently trading above 112.60. Looking at the euro vs. the yen, EUR/JPY is down and is currently trading above 132.70.
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). GDP growth figures announced earlier today met expectations (0.3% quarter-over-quarter). Looking at cross-border stock and bond investments, Foreigners are buying more Japanese equities while Japanese residents continue to buy overseas bonds. Last week, net outflows based on cross-border investments was negative.
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 trading within normal conditions. This is based on various technical indicators when looking at a weekly chart.