Partner Center Find a Broker

Ready for another month of trading the yen? Here are catalysts that you should watch out for:

Consumer-related reports

Japanese reports don’t usually move the yen a lot, but lately traders are paying attention to manufacturing and consumer-related releases.

See, the U.S.-China trade war has some investors worrying about how Japan will fare if/when Trump set his sights on Japan next.

Word around the hood is that the Donald is putting off additional tariffs on Japanese cars, but no one knows how long that reprieve will last.

This week Japan will print its consumer confidence (Oct. 2, 5:00 am GMT) and average cash earnings (Oct. 5, 12:00 am GMT) reports.

A quick look at the economic calendar tells us that analysts are generally expecting lower numbers than their previous releases.

If we do see weaker numbers, then the BOJ will have more incentive to push the pedal to the metal. But if we see improving consumer sentiment and purchasing prospects, then we might see a bit of yen strength during the reports’ releases.

Market risk sentiment

As you can see below, the low-yielding yen still takes cues from global risk sentiment for direction.

This week not only marks the beginning of a new month AND a new trading quarter, but it also heralds another NFP report release.

With tons of top-tier data on the docket AND traders still making sense of where the dollar will go after last week’s FOMC statement, you can count on volatility among yen pairs over the next couple of days.

Just make sure you remain flexible in your trading biases, aight?

Last Week’s Price Review

After two consecutive weeks of being at the very bottom of the forex heap, the yen is turning in a more mixed performance this week (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

Except for CHF/JPY, it looks like most JPY pairs were tracking directional cues from bond yields (as usual).

However, risk sentiment also had a role to play (as usual). Bond yields were on the rise on Monday, for instance, but the yen closed out the day as a net winner, probably because of the risk-off vibes on Monday.

Friday is also another example since bond yields were sliding but the yen was initially weaker, probably because of the risk-on vibes in Asia.

Tuesday’s price action is a bit weirder since the yen was resilient across all pairs, even though risk appetite was the dominant sentiment and bond yields were on the rise. It’s possible, however, that the yen was supported by BOJ Shogun Kuroda’s speech.

You see, Kuroda repeated the BOJ’s mantra that the super loose monetary policy won’t be going away for an “extended period” because of Japan’s low inflation.

However, Kuroda also implied that the BOJ does have a tightening bias and wants to tighten as soon as possible when he said that:

“We hope to achieve 2 percent inflation at the earliest date possible by maintaining our powerful monetary easing, so that we can begin normalizing monetary policy.”