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The Japanese yen takes the crown this week as global risk aversion sentiment and counter currency catalysts push traders back into the safe haven.

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Overlay of Inverted JPY Pairs: 1-Hour Forex Chart

Japanese Headlines and Economic data

Major Market Drivers for the Japanese Yen

Looking at the one hour chart overlay of Japanese yen pairs above, we can see Japanese yen pairs traded mostly in a sideways pattern, and that price action was likely influenced more by counter currency influences than headlines or economic updates from Japan.

Japan’s event calendar was not empty at all with economic updates on Japan’s trade balance, industrial production, and core consumer inflation situations.  We even got a fresh look at the Bank of Japan’s souring perspective on the economy from the latest monetary policy meeting minutes, and the Japanese government also contributed to the headlines with a downgraded economic outlook (the first time they’ve downgraded in three years) thanks to the U.S.-China trade war. But looking at the chart above again, it’s probably okay to say that these stories had little to no influence on creating uniform behavior among Japanese yen pairs.

But we did see two uniform moves among Japanese pairs this week, first the broad rally higher after the FOMC shifted it’s monetary policy outlook from two hikes in 2019 to none, and signaled that the balance sheet run-off will end in September. This prompted a big drop in bond yields and the Greenback, which is likely why we saw the yen rally broadly against the majors as interest rate divergences tightened up a bit.

A second smaller spike higher came on Friday, likely a reaction to the very weak update on Europe’s manufacturing economy as the latest European manufacturing PMI data signaled a further slowdown in March. This likely brought attention back to the slowing global economy story, sparking risk-off behavior that tends to benefit JPY bulls.  This was the event to solidify the yen’s rule on the week as traders flocked back into safe havens into the weekend.