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Will yen bulls get enough momentum to extend the yen’s gains from last week? Here are catalysts you might want to watch.

Flash manufacturing PMI (Nov. 23, 12:30 am GMT)

With the U.S.-China trade war headlines heating up again, traders could go back to watching Japan’s manufacturing indicators more closely for clues on just how strong (or weak) Japan’s prospects are IF the U.S. sets its sights on Japan next.

This week analysts expect to see a reading of 53.0, which is a point higher than October’s 52.9 reading.

Japan will be celebrating its Labor Thanksgiving Day holiday during the release, however, so it’s likely that the reaction to the report would be muted.

Overall risk sentiment

Another week, another chance to take cues from global bond yields?

Traders will pay close attention to any and all headlines that might point to a trade deal between Trump and Xi Jinping at the end of the month.

Updates that point to progress between the two of the world’s largest economies might dent on yen demand as it pushes higher-yielding bets higher.

Oh, and watch out for Brexit-related headlines, too, will you? Until Theresa May hammers a final deal with the EU, convinces enough MPs to back her plan, AND not get ousted in the process, it’s likely that we’ll see more volatility for the pound and safe-haven bets like the yen this week.

Last Week’s Price Review

After two weeks of weakness, the yen is finally turning in a good performance since it’s currently the third best-performing currency of the week (as of 9 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

Yen pairs appear to have been taking directional cues from bond yields (as usual). The yen also very likely got a boost from the prevalence of risk aversion this week.

However, the positive news that China and the U.S. will resume trade talks apparently dampened demand for the yen and/or convinced some investors to unwind some of their safe-haven bets.

The report from the South China Morning Post (SCMP), in particular, triggered a noticeable bearish reaction on the yen and allowed the Kiwi and the Aussie to score wins against the yen despite the prevalence of risk aversion. In fact, the yen broadly weakened on Tuesday even as bond yields fell.

As for some deets, the SCMP report affirmed an earlier Wall Street Journal (WSJ) released a report which claimed that U.S. Treasury Secretary Steven Mnuchin and Vice Premier Liu He had supposedly discussed restarting trade talks.

However, the SCMP report also cited Chinese sources as saying that Vice Premier Liu He will be going to the U.S. to restart trade talks, although a schedule has not been set yet.

And as a side note, Chinese Foreign Ministry Spokeswoman Hua Chunying confirmed those trade-related rumors in a presser later. But again, there’s no set schedule yet.