The yen remains weak this morning, and is currently selling off against all major currencies except the Australian dollar. Safe havens such as the Swiss franc and the yen have been weak in recent times thanks to ongoing optimism for global growth. As the perceived need for safe havens falls, the yen is selling off as a result. While we had called for a weaker yen in late 2017, today the case for prolonged yen weakness is less clear. Despite strengthening commodity prices, inflation expectations remain subdued and the US dollar remains very weak. As a result, the yen may return to a moderate strengthening path later this year. For now, our medium-term trending indicator suggests a bearish trend.
USD/JPY is currently trading above 113.20. EUR/JPY is currently down and trading above 135.70.
This is a fairly light week for economic data relating to the yen. Tomorrow we'll see consumer confidence. On Wednesday, we'll see foreign reserves, the leading indicator and the coincident indicator. Finally on Friday, we'll get cross-border stock and bond investments as well as Eco-Watchers survey data. Last week, manufacturing and services PMIs missed expectations.
As the yen strengthens thanks to a weak US dollar, we are upgrading 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 the yen sells off on hopes for US tax cuts, we are downgrading the yen to bearish. 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.