The Japanese yen is lower against all major currencies today. The yen is currently the weakest against the Canadian dollar, the US dollar and the British pound. Looking at other markets, riskier assets such as equities and commodities are staging a turnaround today. Equity futures including Japan's Nikkei 225 and S&P 500 are currently higher. As such, safe haven demand for the yen is falling.
Turning to economic data, the leading economic index (a measure of sentiment) was below consensus estimates. Earlier today, sentiment from the Eurozone and Germany was also below estimates. As the prospects for future growth looks bleaker, actual growth is likely to worsen as a result. Reactions in the yen were limited following the release. Our short-term and medium-term outlook on the yen remains bullish.
USD/JPY is currently trading above 106.50. EUR/JPY is currently flat and trading above 130.910.
Turning to Japanese economic data this week, we’ll get sentiment surveys and inflation figures. The merchandise trade balance was much better than expected (¥3.4b vs. -¥99.6b expected) due to a slowing pace of imports. The leading economic index for January (114.9 vs. 119.1 expected) missed consensus estimates. On Thursday, we’ll get Nikkei manufacturing PMIs for March and the all industry activity index for January. On Friday, we’ll see the national consumer price index and cross-border stock and bond investments. Last week, Japanese industrial output missed expectations.
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.