Despite another North Korean missile test yesterday, the yen did not strengthen. Instead, the yen weakened yesterday and is mildly stronger today. Other safe havens such as the Swiss franc and gold have experienced similar patterns in the past 24 hours. Following 10-year government bond yields, the yen has mostly traded sideways this week. Between an upcoming Senate tax vote, CPI figures in the EU and US Core PCE data, the trend for bond yields is unclear today. As such we are downgrading the yen to neutral in the short-term.
USD/JPY is currently trading just above 111.40. Looking at the euro vs. the yen, EUR/JPY is up and is currently trading above 132.10.
This is a fairly light week for economic data releases relating to the yen. Large Retailer's Sales were better than estimates (-0.7% vs -0.8% expected) while retail sales met expectations (-0.2%). On Thursday, we'll get cross-border stock and bond investments. Finally on Friday we'll see National CPI, the unemployment rate and household spending. Last week, the trade balance missed estimates.
As the yen runs out of steam, we are downgrading the yen to neutral in the short-term. Note that the currency is trading within normal conditions, based on technical indicators on the daily chart.
As political developments overseas strengthen the yen, we are upgrading the yen to bullish. 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.