Another winning week for the yen! Will risk sentiment its direction for another week?
It’s highly likely. Here’s a list of potential catalysts for the safe haven:
While Japan’s lower-tier reports tend to take a backseat in influencing the yen’s price action, manufacturing-related data have been causing a wiggle or two lately.
See, investors are concerned that the U.S.-China trade war could soon take its toll on Japan’s export-dependent economy. In fact, word around the hood is that Trump will set his sights on Japan next!
The Economy Watchers sentiment report today at 5:00 am GMT will get the ball rolling. Analysts are expecting the survey to print at 47.2 after last month’s 46.6 reading.
Next up is the preliminary machine tool orders on September 11 at 6:00 am GMT. Then, a few hours later BSI will publish its large manufacturing conditions for Q3 2018. If the survey pops to 8.0 from Q2’s -3.2 reading, then we might see some support for the yen.
The core machinery orders report is up on September 11 at 11:50 pm GMT. A quick look tells us that market players expect to see a 5.8% growth after last month’s 8.8% decline.
Better-than-expected releases could improve trade-related outlook for Japan, so make sure you at least take a look at these upcoming reports!
Market risk sentiment
What’s another week without pricing in risk sentiment, amirite?
This week we should pay attention to the U.S. and its trade negotiations with key partners such as Canada and China.
The pressure is on for Minister Chrystia Freeland and her team to keep Canada’s spot on the negotiation table without giving up key conditions to the U.S.
Meanwhile, all eyes will be on Trump’s plans to impose additional tariffs on more of China’s goods. Last Friday the Donald threatened to slap duties on $267 billion worth of Chinese goods on top of the $200 billion ready to be implemented over the next couple of days.
Last but not the least is the U.S. possibly setting its sights on Japan and its goods.
Make sure you don’t miss any related headlines!
Last Week’s Price Review
The yen was edged out by the Swissy and the euro but is still on track for its second week of net wins since the yen is currently the third top-performing currency of the week (as of 8 am GMT).
As usual, JPY pairs were taking directional cues mainly from bond yields. However, risk sentiment also had a role to play (as usual).
The clearest example of this was on Tuesday since bond yields were on the rise because of positive U.S. data, market analysts say.
However, the overlay of inverted JPY pairs clearly show that the yen only grudgingly weakened and even advanced against some of its peers as bond yields climbed ever higher.
And that’s very likely because of the intense risk-off vibes at the time, which sent some safe-haven flows towards the yen.