JPY Daily Updates

29 March 2018

The Japanese yen is mostly stronger today. The yen is currently the strongest against the British pound and the euro. Yesterday, the yen moved down sharply following positive developments relating to tensions in the Korean Peninsula. China claimed that North Korea's Kim Jong Un is committed to denuclearization, while Trump tweeted that he was looking forward to his meeting with the country's leader. As a safe haven currency, the yen tends to weaken on falling political risks, and weakened as a result. The yen was also weaker thanks to recent strength in the US dollar, and thus weakened in relative terms. 

Turning to the latest news, former Finance Ministry official Nobuhisa Sagawa testified to the Japanese Diet regarding the Moritomo school scandal. Akie Abe (Shinzo Abe's wife) was allegedly able to acquire valuable school land below market value. Sagawa's testimony was designed to clarify whether or not he was involved in the falsification of documents (tying Akie to the alleged crime). Unfortunately, Sagawa refused to answer most questions, leaving more questions than answers. According to Japan Times, if prosecutors raid the Japanese Finance Ministry, Abe's odds for continuing as the head of the LDP will fall. Our short-term and medium-term outlook on the yen remains bullish.   

USD/JPY is currently trading above 106.60. EUR/JPY is currently down slightly and trading above 131.220.

Turning to Japanese economic data, this is a relatively light week. Retail sales figures for February (1.6% vs. 1.7% expected) were lower than expectations. Foreigners continue to sell Japanese stocks (-¥2,161.6b) while Japanese investors buy foreign bonds (+¥790.1b). For now, capital is flowing out of Japan. Tomorrow, we'll see the consumer price index for Tokyo, industrial production and the unemployment rate. Last week, national CPI met expectations. 

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 trading within a normal range, 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