The Japanese yen ends its Friday as a net loser as the bulls battled rate cut speculation from the BOJ, mixed Japanese inflation numbers and geopolitical headline risks throughout the week.
Japanese Headlines and Economic data
Monday:
- The Japanese yen spikes higher on Monday, likely on early global risk-off sentiment to start the week. This may have been sparked by a combination of headlines pointing to a weakening global economy (Korea Exports Dent Optimism Over Global Tech Demand Recovery) and on the possibility of a longer time horizon for the Saudi oil facilities to get back on line.
Tuesday:
- Jibun Bank Flash manufacturing PMI: 48.9 in Sept. vs. 49.3 Aug. Final
- BOJ’s Kuroda says any easing will target short-, medium-term rates
- BOJ’s Kuroda Expounds on Virtues of Negative Rates
- After whirlwind of talks, Japan says trade deal with U.S. is agreed
- The Japanese yen rallied during the U.S. trading session, possibly on another round of risk aversion sentiment after we saw more negative developments from the U.S.-China trade story (Mnuchin appears to surprise Trump about request to cancel China visit to US farms, Donald Trump attacks China on trade and urges restraint on Hong Kong protests in speech to UN General Assembly)
Wednesday:
- BOJ ready to ease again if price momentum lost, risks grow: Masai
- BOJ’s Masai: Inappropriate to focus on single measure for easing
- Nothing new from the latest BOJ meeting minutes; Reiterated continued easing and sees that Japan’s economy is likely to continue on a moderate expanding trend; Global macro risks increasing
- In August, Japan services producer prices index rises 0.6% y/y to 102.9 vs. a 0.6% y/y rise in July
- Bank of Japan’s Core CPI index grew 0.4% in August vs. 0.6% rise in July
Thursday:
- BOJ’s Kuroda warns of overseas risks, signals readiness to adjust policy
- Mid-to-long dated JGB yields rise after BOJ trims buying amount at operation
Friday:
- U.S. will not impose auto tariffs on Japan if progress continues: Kudlow
- Tokyo inflation slows to 16-month low, poses challenge to BOJ’s 2% target
- Broad yen weakness during the European trading session. There doesn’t seem to be a direct catalysts, but arguably it could be on a combination of low Japanese inflation data, BOJ rate cut speculation and maybe global risk-on sentiment (possibly on news of a Saudi Arabia / Yemen Ceasefire?)
- White House deliberates block on all US investments in China – this surprise announcement shook up global risk sentiment as the idea weakened the prospects of a trade deal between the U.S. and China, sending traders back into safe havens like the yen into the weekend.
