The Japanese yen is mixed today, and is currently gaining against the US dollar and weakening against the euro. As today is a public holiday in Japan, trading volumes in the yen are fairly limited. In general, the short-term yen rally appears to be fading as global risk appetite improves. Last Friday, the S&P 500 ended the day higher by 1.49%. Today, key Asian stock markets including Hong Kong's Hang Seng are more stable. As a safe haven currency, the yen rallies during downturns and tends to weaken when global risk appetite accelerates. While the yen has been strongly correlated to global bond yields in recent history, the correlation has broken down lately thanks to the stock market rout and monetary tightening expectations. Our short-term and medium-term outlook on the yen remains bullish.
USD/JPY is currently trading above 108.60. EUR/JPY is currently flat and trading above 133.20.
Looking at Japanese economic data, traders will be focused on upcoming GDP figures. On Wednesday, we'll see Q4 GDP growth numbers. On Thursday, we'll see machinery orders and industrial output. On Friday, we'll see cross-border stock and bond investments. Last week, cross-border figures showed that capital was flowing into Japan (strengthening the yen).
As the yen strengthens, we are upgrading the yen to bullish in the short-term. Note that the currency is trading within a normal range, based on technical indicators on the daily chart.
As the yen strengthens, 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.