The Japanese yen bounced back from last week’s terrible outing, riding higher to the top spot among the major currencies on a renewed focus on global growth fears and rising geopolitical risks.
Japan Headlines and Economic data
Monday:
- Bank of Japan Summar of Opinions: BOJ board debated near-term stimulus in September
- Japan’s Aug factory output drops more than expected on slowing overseas demand
- BOJ to cut buying in most JGB maturities, signals desire to steepen yield curve
Tuesday:
- Japan’s jobless rate flat at 2.2% in August, remaining at lowest level in 26 years
- Tankan manufacturing index falls -2 to 5 in the third quarter; non-manufacturing falls -2 to 21
- Japan proceeds with twice-delayed sales tax hike as growth sputters
- Global risk aversion kicks into high gear, benefiting the Japanese yen after a much weaker-than-expected U.S. manufacturing sentiment report (US manufacturing contracts to worst level in a decade), which capped off a slew of weak manufacturing survey data across the globe.
Wednesday:
- Japan’s monetary base increases by 3.0% in Sept. vs. 2.8% in Aug.
- The Consumer Confidence Index (SA) in Sept. was 35.6, down 1.5 points m/m
- Another round of risk aversion sentiment hits the markets during the Wednesday session, likely on a combination of U.S. geopolitical risks (Trump impeachment probe gains steam with briefing, depositions) and Asian geopolitical risk (North Korean projectile lands in Japan’s exclusive economic zone, Tokyo says), and new trade war risks (US to impose tariffs on EU aircraft and agricultural products) on top of the global growth slowdown fears from earlier in the week. The Japanese yen continued its rally on the week on these rising pressures.
Thursday:
- BOJ’s Funo: Global recovery delayed, no sign of it happening yet
- BOJ’s Funo stresses pre-emptive policy action, bolstering October easing chance
- BOJ’s Funo warns on overseas risks, signals readiness to respond
- Japan service sector output rises solidly in September but new orders grow at weak pace relative to 2019
Friday:
- The Japanese yen gives back some of its gains during the U.S. session, which seems to correlate with the positive surprise from the U.S. employment update (September unemployment rate falls to 3.5%, a 50-year low, as payrolls rise by 136,000), calming fears of a global growth slowdown a bit.
