It was an up and down week for the Japanese yen, but ultimately it was a net loser on rising global risk sentiment and net negative Japanese data.
Japanese Headlines and Economic data
- Japan Q3 corporate capital spending jumps; profit and sales fall
- Sharper fall in exports drives further Japanese manufacturing deterioration
- Volatility picked up for Japanese yen pairs, but with mixed directional bias as the financial markets reacted to weaker-than-expected business sentiment reads from the U.S.
- Japan preparing $120 billion stimulus package to bolster fragile economy
- Global risk sentiment leaned toward negative on the session, and likely contributed to the rally in the Japanese yen after Trump’s comments that the China trade deal has ‘no deadline’ and that it could possibly come after next year’s U.S. elections. Comments that the U.S. may propose tariffs on French goods was also likely a contributor to negative global risk sentiment.
- Japnese service sector stages weak recovery in November
- The yen begins to pull back from its early week gains, probably on a global risk sentiment reaction to a slew of positive manufacturing surveys from China (Chinese Caixin services PMI up from 51.1 to 53.5 vs. 51.2 forecast in Nov) and net positive reads from Europe, especially Germany (German business activity growth ticks higher but remains modest)
- BOJ’s Harada calls for continuing current easing
- Japan manufacturers turn less pessimistic, service sector mood brightens
- Japan launches $122 billion stimulus to fight trade risks, post-Olympic slump
- Japanese average cash earnings y/y up by another 0.5% vs. projected 0.2% uptick
- Japanese household spending down by 5.1% vs. projected 3.1% slump
- Japanese Finance Minister Aso: Negative rates are hurting banks, in turn hurting individuals
- Japan Leading indicator falls to 91.8 in October vs. 91.9 previous
- Broad rally in the Japanese yen during the morning U.S. trading session (with exception against the U.S. dollar). Not sure that there is a direct catalysts other than counter currency weakness in the other majors, sparked by U.S. dollar strength after the surprisingly strong U.S. employment report (U.S. Jobs growth soars in November as payrolls surge by 266,000), and possibly on news that China will waive tariffs on some U.S. soybeans and pork in goodwill gesture towards reaching a trade deal.