Partner Center Find a Broker

Not a lot of top-tier data from Japan last week, so it looks like the yen is in for another risk-driven price action this week.

CPI releases

Tomorrow at 5:00 am GMT the BOJ will publish its core CPI release. Then, Tokyo’s CPI – a widely recognized leading indicator for the country’s inflation – will be released on July 26 at 11:30 pm GMT.

Though the yen doesn’t usually react a lot to the CPI releases, keep your eyes peeled for any significant hits or misses. The BOJ might be in for a long fight, but that doesn’t mean it won’t react to significant developments in Japan’s consumer prices!

Overall risk sentiment

As mentioned below, the yen takes more cues from overall risk sentiment than specific economic events.

This week pay close attention to the escalating trade war, which is looking like it could turn to a CURRENCY war.

If you recall, the Donald has done damage to the dollar after criticizing the Fed’s interest rate hikes, while the People’s Bank of China (PBoC) had lowered its yuan mid-point fix for consecutive days last week.

Uncertainties relating to the world’s two largest economies can affect demand for high and low-yielding bets, so make sure you don’t miss any headlines related to it!

Last Week’s Price Review

After three weeks of net losses, the yen may finally see a winning week since since the yen is currently in third place (as of 8 am GMT).

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 always, the yen’s price action was dictated mainly by bond yields. Also as always, risk sentiment also had an effect on the yen’s price action.

An example of when risk sentiment clearly had an effect on the yen’s price action is what happened on Monday since bond yields were on the rise back then but the yen only grudgingly weakened against its peers and even eventually won out against the higher-yielding Aussie and Kiwi, very likely because of the risk-off vibes on Monday.

As a side note, the BOJ had a stealth or mini “taper” on Thursday when it pared the amount of JGBs it bought for its QE program. However, that had no apparent effect on the yen’s price action. The good old days when the yen reacted to economic data and the BOJ’s actions are long gone, I suppose.