The Japanese yen is looking mixed today. The currency is higher against the US dollar, flat against the euro, but weakening against the British pound and the Australian dollar. Earlier today, Bank of Japan Governor Kuroda spoke in the Diet (Japan's parliament). He said that Japan's failure to achieve 2% inflation was regrettable, and the country needs more monetary easing as a result. He also stated that there was no plan for a comprehensive reassessment of the Bank's policies in the near-term. He also added that 2% inflation would help stabilize the yen against its peers over the longer-term. USD/JPY weakened following the event. Turning to economic data, the leading index continued to expand but fell below expectations. In general, the Japanese economy continues to perform well but is increasingly growing at a slower pace relative to the market's expectations. Our short-term and medium-term outlook on the yen remains bullish.
USD/JPY is currently trading above 106.60. EUR/JPY is currently flat and trading above 131.30.
Looking at Japanese economic data this week, we’ll see retail sales and core inflation figures. The leading economic index for December (107.4 vs. 108.3 expected) was below consensus estimates. On Wednesday, we’ll see industrial production, retail sales, and housing starts. On Thursday, we’ll see cross-border stock and bond investments. On Friday, we’ll see core (ex-food and energy) National CPI, as well as unemployment figures. Last week, cross-border flows suggested a continuation of net inflows into Japan.
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.