Not a lot of report scheduled from Japan this week. So, which catalysts can send the yen higher or lower over the next couple of days?
Consumer-related reports (Apr 5, 12:30 am GMT)
Now that the quarterly Tankan indices have been released, it probably won’t be until Friday during the Asian session when the yen will next see moves related to its domestic data.
The first report, the average cash earnings (y/y) for the month of February, is expected to slow down from 1.2% to 0.9%. Meanwhile, household spending (y/y) is seen to grow by 1.9% after printing a 2.0% uptick in January.
Recall that the BOJ is already dealing with inflation that’s still way below its 2.0% target despite increasing its balance sheet for YEARS.
If this week’s consumer reports hint at weaknesses in future consumer spending, then the central bank and the government will be under even more pressure to do something about the tepid consumer price growth and easing the impact of the sales tax hike planned for later this year.
Bond yields and risk sentiment
As seen in last week’s trading, bond yield movements have come back as one of the yen’s biggest price movers.
This week keep close tabs on further declines in the more closely-watched markers.
Falling global bond yields usually mean that traders are flocking to the “safer” government IOUs rather than the riskier assets. So, unless we see Japan’s 10-year JGBs fall faster than its counterparts (as we saw last week), then it’s likely that the yen will see increased demand due to its “safe haven” status.
Global risk sentiment could also come into play over the next couple of days. Catalysts such as the U.S. NFP report, euro zone PMIs, and Brexit shenanigans could push or drag demand for the yen, so make sure you stay glued to the tube for any relevant updates!
Missed last week’s price action? Read JPY’s price recap for March 25 – 29!