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Another week, another chance to trade risk sentiment through the yen? Here are catalysts you should pay attention to over the next couple of days.

Manufacturing-related reports

Japan won’t be printing top-tier economic reports over the next couple of days, but it will publish data that might give us ideas on how Japan’s manufacturing sector is faring.

The BSI manufacturing index is first at 11:50 pm GMT today, followed by the preliminary machine tool orders (y/y) at 6:00 pm GMT and the core machinery orders at 11:50 pm GMT tomorrow.

Tankan’s manufacturing and non-manufacturing indices are next, while the revised industrial production data will be printed at 4:30 am GMT in the same trading session.

Since machinery-related goods make up a HUGE chunk of Japan’s exports, gauges on the country’s manufacturing industry will tell us a lot about the prospects of Japan’s economy.

Market risk appetite

New week, new chance to trade the yen as a safe haven!

We know from the summary below that the yen still takes cues from bond yield action and overall risk sentiment.

This week’s list of potential catalysts includes the U.K. Parliament’s Brexit vote, monetary policy decisions from the SNB and ECB, and updates on the U.S.-China trade row.

Progress on the U.S.-China trade negotiations might take center stage for market players, but make sure you also keep close tabs on other catalysts in case they inspire sharp moves for the yen crosses!

Last Week’s Price Review

After limping to the finish line in last place last week, the yen had a solid recovery this week and is currently poised to take the second top spot (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

Global bond yields are broadly lower for the week, thanks to safe-haven demand for bonds due to the geopolitical risks, as well as weaker expectations for future Fed rate hikes, which market analysts attributed to poor U.S. data and the yield curve inversion of some U.S. bonds.

And the slide in bond yields plus the prevalence of risk aversion apparently gave the yen a double boost.

However, risk sentiment also had a detrimental effect on the yen’s price action.

And you can see this on Monday since bonds yields were moving lower, but risk-taking prevailed at the time since the market was still euphoric about the trade war truce between the U.S. and China, so the yen had a hard time gaining ground.

Risk sentiment soured after that, but finally began to recover during Friday’s Asian session. And unfortunately for the yen, that allowed the Swissy to steal the top spot from the yen.