The Japanese yen is mostly down today. The yen is weakening against the US dollar, the British pound, and commodity currencies (including AUD and CAD). Last week, the yen moved lower against major currencies, as the US dollar staged a broad rebound. The yen remained steady today as Prime Minister Shinzo Abe’s cabinet improved its performance in a weekend opinion poll according to Japan Times. The recent Moritomo Gakuen scandal has led to a significant drop-off in support for Abe's government in recent weeks.
Turning to economic news, both the Tankan large manufacturing index (Q1) and Nikkei manufacturing PMIs (March) decelerated relative to previous figures. China also implemented trade tariffs against the US, a story we covered in more detail in our US dollar daily update. While the yen tends to strengthen on poor sentiment data and political risks, the currency has managed to brush off the concerns for now. Our short-term and medium-term outlook on the yen remain bullish.
USD/JPY is currently trading above 106.320. EUR/JPY is currently slightly higher and trading below 131.0.
Looking at Japanese economic data this week, we’ll see sentiment surveys and cross-border investment data. The Tankan large manufacturing outlook (24 vs. 25 expected) missed consensus estimates while Nikkei manufacturing PMIs (53.1 vs. 52.9 expected) were ahead of expectations. On Wednesday, we’ll see Nikkei services PMIs. On Thursday, we’ll see foreign investments in Japanese stocks and foreign bond investments by Japanese investors. On Friday, we’ll see household spending, and the leading economic index. Sentiment data from Japan has been decelerating this year. Last week, retail sales 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.