Another week, another chance to buy the yen? Here are potential catalysts that might affect the low-yielding currency this week!
On Tuesday (March 27) at 5:00 am GMT the Bank of Japan (BOJ) will publish its core CPI figure. Market players are expecting a 0.7% reading after seeing 0.8% growth in January.
Meanwhile, Tokyo’s core CPI – usually seen as a leading indicator – will be out on Thursday (March 29) at 11:30 pm GMT. Analysts are expecting no change from its 0.9% growth in February.
BOJ’s Kuroda and his team have been sharing that they’ll want to keep an accommodating vibe until they see momentum for consumer prices. If the reports print to the upside, however, then expect more yen-buying on speculations that the BOJ would “normalize” their policies sooner than later.
Other top-tier releases
On Wednesday (March 28) at 11:50 pm GMT Japan will publish its annualized retail sales report. Then, on Thursday starting 11:30 pm GMT we’ll see the economy’s unemployment rate and preliminary industrial production numbers.
The reports don’t usually move the yen around for long, but considering that most of the major markets will be out for Easter holidays, traders could use the top-tier reports as excuses to take profits from their positions.
Trade war concerns
Concerns over trade war between the world’s largest economies have pushed investors into the arms of the yen for weeks now.
Unless we see less FUD-y headlines over Trump’s tariff headlines and more productive negotiations, it’s likely that the risk-averse trading environment will persist.
As mentioned above, though, y’all should also keep your eyes peeled for potential profit-taking ahead of the end of Q1 2018 and a long weekend for many traders.
Last Week’s Price Review
The yen was last week’s champ but it got knocked off the top spot this week. Even so, it’s still worth pointing out that the yen is on course (as of 8 am GMT) to closing out the week as the third best-performing currency after the Loonie and the pound.
Interestingly enough, the yen was actually a net loser for most of the week and only became a net winner on Thursday.
And the yen gained ground on Thursday, apparently because the yen was tracking the slide in bond yields. And bond yields were down hard, likely because of safe-haven demand for bonds, given the intense risk-off vibes due to fears of a potential trade war between the U.S. and China. It’s even very likely that some of those safe-haven flows made their way to the yen.
It’s worth pointing out, though, that the yen did decouple from bond yields during Tuesday’s U.S. session since bond yields rose, supposedly because of Fed rate hike expectations, market analysts say.
Instead of weakening across the board, however, the yen held steady on most pairs, likely because of lingering trade war fears. And as mentioned earlier, focus shifted back to trade war fears on Thursday, which is when the yen captured the bulk of its gains on most pairs.