Is the yen in for another week of taking cues from risk appetite? If it is, which catalysts can move the safe haven around?
Here’s a list:
Average cash earnings (Dec 7, 12:00 am GMT)
Though it doesn’t usually move the yen for long, the report on average earnings of Japanese workers can point to future spending patterns.
Analysts currently expect to see a 1.0% growth for the month of October after September registered a 0.8% uptick.
A stronger-than-expected earnings rate could mean more consumer spending (and maybe higher inflation?) and prop the yen higher across the board.
Overall risk and dollar sentiment
As you can see below, the yen still takes a lot of cues from global risk sentiment.
This week a bunch of FOMC members are scheduled to make speeches, which means that they will have a chance to either support or weaken the prospect of their current rate being “just below” the neutral range.
And then there are shenanigans we get from NFP-related reports. Now that Fed members have hinted their preference for data dependence, you can bet that market players will pay close attention to Uncle Sam’s data releases again.
Last but not the least several economic themes that are still brewing in the forex scene. Keep close tabs on updates related to Brexit, Italy’s debt drama, OPEC and Russia’s plans to cut oil production, and the U.S.-China trade war for clues on how in demand the low-yielding yen will be against its major counterparts.
Last Week’s Price Review
The yen is currently the second biggest loser of the week (as of 9 am GMT), so two consecutive weeks of net wins for the yen will soon be coming to an end.
Bond yields are actually mostly in the red for the week. And while JPY pairs were taking some directional cues from the slide in global bond yields, the risk-friendly vibes this week apparently got in the way.
Moreover, JPY pairs (except USD/JPY) went in the opposite direction when bond yields plunged on Wednesday due to Fed Chair Powell’s speech.
And that’s because Powell’s speech was viewed as dovish, which means relatively easier credit conditions for longer, and caused risk appetite to ramp up. So, yeah, it still boils down to risk appetite.