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The Japanese yen was a big loser this week as we saw more signals that the Bank of Japan may enact further stimulus as global economic uncertainties grow.
Japanese Headlines and Economic data
Monday:
- BOJ debated cost of easing in clarifying rate guidance: April meeting minutes – The Japanese yen spent more time in the red than not on Monday, likely on this event as it adds to speculation of monetary policy stimulus, which tends to be a negative for the currency.
- Japan’s Services Producer Price Index (All items) rose 0.8% from the previous year.
Tuesday:
- Early Asia session strength in yen pairs may have stemmed from a rise in global risk aversion sentiment as Middle East tensions continued to rise between the U.S. and Iran.
- Bank of Japan core CPI at 0.7%
- The Japanese yen started to take a turn to the downside during the afternoon U.S. session, most likely sparked by comments from Fed officials (Bullard calls for ‘insurance’ cut, Fed stronger case for accommodation) strengthening speculation of a rate cut very soon, even if it’s not likely the 50 bps cut investors were looking for. Global risk sentiment turned toward the positive which hurt “safe haven” assets, including the yen.
Thursday:
- Japan May retail sales rise 1.2% y/y
- Bank of Japan’s deputy chief signals room for pre-emptive easing to fend off risks – This event correlated with a broad move lower in the Japanese yen against the other major currencies, again adding to speculation of more monetary policy stimulus as local and global economic risks grow.
Friday:
- Abe, Xi agree on need for ‘free, fair’ trade
- Japan’s jobless rate steady, Tokyo June core CPI rises 0.9%
- BOJ board debated room for easing – June meeting summary
- Japan’s industrial output rises 2.3% in May on higher auto production
- Housing starts in Japan dropped by 8.7 percent year-on-year in May 2019