So the yen was last week’s biggest loser. Will the safe haven have a chance to recoup its losses this week?
Here are some potential catalysts:
Kuroda’s speech (Sept. 25, 5:35 am GMT)
Tomorrow during the Asian session Bank of Japan (BOJ) Governor Kuroda will give a speech in front of business leaders in Osaka.
Just last week the head honcho repeated the central bank’s bias to maintain its easy policies, saying that it must maintain its easing since “it will take time to achieve our inflation target.”
Japan’s top-tier reports (Sept. 27, Asian session)
On Thursday Japan will print major economic reports such as the unemployment rate, preliminary industrial production, retail sales, and Tokyo’s core CPI.
Economic reports don’t usually dictate the yen’s price action for long, but they could cause a wiggle or two among yen pairs if they show significant hits or misses from analysts’ expectations.
Reports such as retail sales and industrial production could also show how strong (or vulnerable) the economy is in case of a trade war, so you can bet other market geeks will be taking note of their results.
Make sure you don’t miss any of these releases!
Overall risk sentiment
Another week, another chance to dance to the bond yields’ tune?
With the new U.S. and Chinese tariffs booked to take effect today and the Fed scheduled to give its monetary policy decision this week, traders will be on their toes trading the high-yielders and the safe-havens.
Which market theme will reign supreme this week? More importantly, how will they affect the yen’s price action?
Last Week’s Price Review
The yen is currently THE biggest loser of the week (as of 8 am GMT), which is a repeat of last week’s poor performance.
As usual, JPY pairs were taking directional cues from bond yields. The yen wasn’t just taking its marching orders from bond yields, though, since JPY pairs decouple from bond yields on Wednesday and Thursday.
Bond yields were on the rise on Wednesday. And while most JPY were weaker on the day, they broadly strengthened during the late London / early U.S. session, likely because of safe-haven flows due to renewed Brexit-related jitters, since The Times released a report back then, claiming that Theresa May will reject E.U. Chief Brexit Negotiator Michel Barnier’s “improved” proposal for solving the Irish border issue.
Risk-taking was the dominant sentiment on Wednesday, though, and bond yields were on the rise, so the yen’s recovery attempt eventually began to lose steam.
As for the decoupling on Thursday, bond yields fell after an initial rise and market analysts blamed the slide on lingering trade-related concerns and Brexit-related uncertainty.
As a side note, the BOJ announced its latest monetary policy decision back on Wednesday. But as usual, the event was essentially a dud since the BOJ announced no changes to its monetary policy.