Net negative week for Japanese yen pairs, likely on rising risk sentiment as expectations of stimulative efforts from central banks rise and priced into the markets.
Japanese Headlines and Economic data
Monday:
- Japan’s business spending increased in January-March amid murky outlook
- Japan Inc to keep up investment despite trade war worries
- Nikkei Japan Manufacturing PMI: Output continues to fall amid weak demand
- A private survey shows China’s manufacturing activity for May was slightly higher than expected – the Chinese update was probably the driver for early global risk on sentiment.
Tuesday:
- Powell says the Fed will ‘act as appropriate to sustain the expansion’ – arguably the spark for this week’s general risk-on lean in the global markets as the odds of U.S. interest rate cuts rise.
- Mexico’s Pres. López Obrador expects deal with U.S. over immigration
Wednesday:
- Nikkei Japan Services PMI comes in at 51.7 in May vs. 51.8 in April
- Short-term Bounce in JPY pairs on broad risk-off sentiment, correlated with the weak U.S. ADP employment report, the worst in 9 years. Traders likely view a weak jobs update to support the argument for the Federal reserve to cut interest rates.
Thursday:
- BOJ’s Kuroda warns of potential dangers from excessive credit growth
- Yen pairs (minus USD/JPY) fell during the U.S. trading session, possibly on a rise in risk-on sentiment after the ECB announced the terms of the TLTRO3 program and that interest rate hikes will not be considered until 2020–both actions are considered stimulative to the economy.
Friday:
- Japan’s household spending, wage decline cloud economic outlook
- Japan April real wages fall for fourth straight month
- Japan’s economy still ‘worsening’ despite improvement in key index, government says
- Another weak U.S. jobs update correlates with a somewhat broad move lower in yen pairs, again arguing that weak U.S. economic data will lead to stimulative actions from the Federal Reserve.
