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The yen’s price action was a mixed bag of nuts, as yen crosses were influenced by bond prices and overall risk sentiment. Will the yen get to set its pace this week?

Maybe not.

For one thing, there are no major reports scheduled from Japan this week. This means that yen crosses could once again take cues from overall risk sentiment.

This week pay close attention to the FOMC statement, as it could make or break the dollar’s winning streak across the board. More importantly, this could also influence U.S. bond yields, which could affect bond yield differentials (and therefore demand) for a lot of the higher-yielding currencies.

Oh, and keep your eyes peeled for any geopolitical or trade updates from the major economies!

Last Week’s Price Review

The yen is currently mixed for the week (as of 8 am GMT). There’s a chance that the yen’s ranking may deteriorate, however, since the yen only barely won out against the Swissy and the Aussie.

Overlay of Inverted JPY Pairs & US10Y Bond Yield (Black Line): 1-Hour Forex Chart
Overlay of Inverted JPY Pairs & US10Y Bond Yield (Black Line): 1-Hour Forex Chart

As usual, yen pairs were taking directional cues from bond yields. However, risk sentiment also had an effect on the yen’s price action, such as when turned in a poor performance when risk appetite was the dominant sentiment on Monday and Tuesday.

The yen also tried to recover from its losses on Wednesday even as bond yields rose. And that was likely due to the intense risk-off vibes at the time.

Thursday was the opposite of Wednesday since bond yields fell but the yen failed to stage a broad-based recovery, very likely because of the returning risk-on vibes. Although it’s also possible that traders were standing by ahead of the BOJ statement.

Speaking of the BOJ statement, I noted in Friday’s Asian session recap that the BOJ maintained its current monetary policy while removing its timeline for hitting the bank’s inflation target. But as usual, the BOJ statement was a dud and didn’t really have a significant effect on the yen’s price action.