JPY Daily Updates

14 February 2018

The Japanese yen is up today, after strengthening yesterday. Despite warnings from Japan's government and the Bank of Japan's commitment to monetary easing, the yen continues to shine. Looking at economic data, Q4 GDP growth missed estimates. Annualized quarter-over-quarter figures came in far below estimates, despite positive data from recent sentiment surveys. While reactions in the yen were limited following the release, the yen continues to attract safe haven flows. Turning to stock markets, while the rout appears to be ending, the yen continues to strengthen. This is a potential sign that fears remain widespread, particularly in Japan. Japan's Nikkei 225 has been particularly weak, unlike the S&P 500 and the Nasdaq which have been strengthening this week. Our short-term and medium-term outlook on the yen remains bullish.    

USD/JPY is currently trading above 106.90. EUR/JPY is currently flat and trading above 133.0.

Looking at Japanese economic data, traders will be focused on upcoming GDP figures. Annualized QoQ GDP growth numbers (0.5% vs. 0.9% expected) widely missed estimates. Tomorrow, 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). 

Updated 
Short term outlook
Bullish

As the yen strengthens, we are upgrading the yen to bullish in the short-term. Note that the currency is looking overbought, based on technical indicators on the daily chart. 

Medium term outlook
Bullish

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. 

Updated