JPY Daily Updates

04 April 2018

The Japanese yen is currently trading sideways. The currency is making small gains versus the US dollar, euro and the British pound while selling off against the Australian dollar and the Canadian dollar. Yesterday, the yen weakened as riskier investments such as equities and commodities staged a comeback.

Turning to news, traders are digesting the impact of new US tariffs focused on China. While the risks of an all-out trade war are escalating, reactions in the yen have been limited. As a safe haven, the yen tends to strengthen when geopolitical risks accelerate. We described the tariffs in more detail in our US dollar daily update. As the biggest moves in financial markets have occurred during US trading hours in recent days, a more significant move in the yen may occur later today. Our short-term outlook on the yen is now neutral, while our medium-term outlook on the yen remains bullish. 

USD/JPY is currently trading above 106.50. EUR/JPY is currently down and trading below 130.620.

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. Nikkei services PMIs (50.9 vs. 51.6 expected) were below consensus expectations. Tomorrow, 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.

Updated 
Short term outlook
Neutral

As the yen runs out of steam, we are now neutral on the yen 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