JPY Daily Updates

22 January 2018

The Japanese yen is slightly weaker today. Looking at the yen against its major global peers, the currency is selling off against the US dollar, the euro and the British pound. Earlier today, the Reuters Tankan survey showed that Japanese manufacturer optimism is at an 11-year high. Following two years of global economic expansion, Japanese businesses remain optimistic that the bull market can continue. Thanks to strong data, the yen is weaker this morning (as a safe haven currency, the currency tends to weaken on good data) despite falling global bond yields. Our medium-term outlook on the yen remains neutral.     

USD/JPY is currently trading above 110.70. EUR/JPY is currently up and trading above 135.60. 

Looking at economic data this week, markets will be watching the BoJ's upcoming event as well as upcoming inflation figures. Earlier today, the Reuters Tankan survey accelerated to an 11-year high (35). Tomorrow, we'll see the BoJ's interest rate decision and statement. On Wednesday, we'll see Japanese trade figures. We'll also get the leading economic index as well as the coincident index. On Thursday we'll see cross-border stock and bond investments. Finally on Friday we'll see inflation figures. We'll also see the BoJ's minutes. Governor Kuroda is also scheduled to speak on Friday. Last week, cross-border investments showed continued inflows into Japan. 

Updated 
Short term outlook
Bullish

As the yen strengthens thanks to changes in the Bank of Japan's policies, we are upgrading the yen to bullish in the short-term. Note that the currency is currently looking overbought, based on technical indicators on the daily chart. 

Medium term outlook
Neutral

As the yen strengthens on weak inflation data, 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. 

Updated