The Japanese yen is currently weaker against all major currencies. The yen is the weakest against the British pound and the US dollar. Last week, the yen ended lower despite increasing fears of a trade war. After looking overbought at the end of March, the yen has been selling off in April. Despite recent weakness, slowing global growth and rising geopolitical tensions should keep the yen on a strengthening path.
Turning to the latest news, investigations into the Moritomo scandal suggest that the Finance Ministry colluded with the Osaka-based school operator in order to drive down the value of the school land. According to Japan Times, Moritomo Gakuen was asked to lie about the cost of removing waste from its property. The news increases the likelihood that Japan's Prime Minister Abe will be forced to resign. A weekend survey also showed that a majority of Japanese residents now disapprove of Abe's cabinet for the first time in six months. Our short-term outlook on the yen is neutral, while our medium-term outlook on the yen remains bullish.
USD/JPY is currently trading above 107.10. EUR/JPY is currently up and trading below 131.40.
Looking at Japanese economic data this week, traders will be watching sentiment and machinery orders. The currency account for February was slightly below expectations (¥2,076.0b vs. ¥2,160.0b expected). The Eco-Watchers survey (outlook) for March was also below expectations (49.6 vs. 51.5 expected). On Wednesday, we'll see machinery orders for March. On Thursday, we'll see cross-border stock and bond investments. Last week, the Tankan large manufacturing survey missed expectations.
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.
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.