The Japanese yen comes out as a big loser as traders sold out of safe haven assets on a very positive stream of geopolitical headlines later in the week, on top of net negative economic updates from Japan.
Japanese Headlines and Economic data
- Key Japan economic index falls, government changes view to ‘worsening’
- Japan says it will sign trade agreement with U.S. in Washington today
- Japan’s household spending rises for ninth month, outlook still fragile
- Japan’s August current account surplus rises 18%
- Japan closely monitoring impact of tax hike
- A small boost higher for the Japanese yen against the majors, likely on faltering optimism on the U.S.-China trade negotiations after reports of the U.S. blacklisting more Chinese companies from trade, and possibly on reports of the White House looking to limit Chinese stocks within government pension funds.
- More pressure on the Japanese yen and other safe havens on rising global risk-on sentiment after signs of a partial trade deal between the U.S. and China appear, if President Trump refrains from further tariffs.
- Japan Bank lending +2.0% y/y in September vs. 2.1% in August
- Japan’s soft machinery orders heighten doubts over business spending
- Japan’s producer prices continue to fall
- After a short spike higher on reports of no progress between the U.S. and China on trade talks, the yen began it’s really big sell off for the week on a reversal of the earlier reports on the U.S.-China trade negotiation front (White House denies report China’s Liu He plans to leave Washington early; U.S. Weighs Currency Pact With China as Part of Partial Deal) and news of a potential pathway to a Brexit deal after a constructive meeting between Britian and Ireland meeting.
- Japan M2 money supply grows 2.4%
- Global risk-on sentiment continues off of more positive updates to U.S.-China trade negotiations (Trump says ‘good things’ are happening at China trade talks), and continued good vibes that a Brexit deal may happen off of Thursday’s news. The bullish excitement for risk assets may also possibly be on the news that the Fed is extending its overnight funding operations through January 2020, a move that supports bank reserves to make sure overnight rates don’t spike higher again to stay within a targeted range.