Mixed week for Japanese yen pairs as counter currency flows battled the BOJ and other central bank’s dovish commentary, as well as their calls for potential stimulus ahead.
Japanese Headlines and Economic data
Monday:
- BOJ to stand pat even as trade war, dovish Fed cloud outlook -somewhat of a broad move higher on global risk aversion sentiment during the Asia session, likely due to economic slowdown fears after starting to hear dovish outlooks on the economy from central banks.
Tuesday:
- Darkening mood among Japanese manufacturers flags risks ahead – Reuters Tankan
- Japan government sticks to ‘moderate’ economic view despite global risks
- Kuroda says BOJ will debate rising overseas economic risks this week
- Uniform drop in the yen during the U.S. trading session as global risk sentiment rises after ECB President Mario Draghi signals the possibility of stimulus coming
Wednesday:
- Japan says G20 summit to debate trade including WTO reform
- Japan exports slide for 6th month as trade troubles knock demand, weaken outlook
Thursday:
- Bank of Japan joins Fed in signaling easing if needed, keeps policy steady for now – highly likely this was the catalyst for the broad move lower in the Japanese yen against the majors during the morning London session as the potential action of combining interest rate cuts with bigger asset buying would probably reduce the value of the currency.
- News of Iran shooting down a U.S. drone aircraft over international waters spark geopolitical fears and a rally in safe havens, including the Japanese yen, albeit a short-lived rally.
Friday:
- Flash Japan Manufacturing PMI edges down to 49.5 in June, from 49.8 in May; Manufacturing conditions deteriorate amid sharpest fall in new orders for three years during June
- Japan’s core consumer prices rose 0.8 percent in May from a year earlier – arguably the catalyst for a very short-term broad bounce in Japanese yen pairs as it was better-than-expected (0.7% forecast) and takes away from the need for the BOJ to increase stimulus argument for now.
- The possibility of further stimulative efforts from central banks, positive developments from the U.S.-China trade talk theme (U.S. Vice President Mike Pence deferred a planned speech on China policy on “positive signs” the deal is back in the works), and Iran-U.S. tensions calming a bit (Trump says he aborted retaliatory strike to spare Iranian lives) are likely the drivers for global risk sentiment to rise into the weekend, thus pushing the Japanese yen lower.
