A parade of risk-friendly headlines pushed the yen into Loserville last week. Can the bulls make up for the losses with this week’s potential catalysts?
National core CPI (Oct 17, 11:30 pm GMT)
Headline consumer prices fell from 0.5% to a six-month low of 0.3% from a year ago in August.
The core reading, which excludes volatile items such as fresh food, also edged lower from 0.6% to 0.5% for in line with market’s expectations.
This week analysts see the headline CPI weakening further to 0.2% while the core figure is seen lower at 0.3%.
Remember that slower-than-expected consumer price growth could mean a longer period of accommodative policies from the Bank of Japan (BOJ). If this week’s closely watched inflation releases miss expectations, then we could see the yen extend its losses against its counterparts.
Market risk appetite
We’ve seen from last week’s price action that traders play the yen as a safe haven when big geopolitical and countercurrency headlines hit the markets.
This week Brexit-related news will likely rock the charts as leaders rush to get a deal on the table to avoid a hard Brexit by the end of the month.China’s top-tier data releases could also take center stage, as performance indicators of the world’s second largest economy could dictate overall risk sentiment.
Finally, look out for updates on the U.S.-China trade negotiations. Both sides have (verbally!) agreed on a “Phase 1 deal” that involves China buying tons of U.S. agricultural goods while the U.S. has pinky sworn not to pull the trigger on the scheduled tariff additions in October. How long will the truce last, though?
Missed last week’s price action? Read JPY’s price recap for Oct. 7 – 11!