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The Japanese yen closed the week in what was a mostly quiet one for the major currencies.  It’s likely risk sentiment was the major driver again as traders leaned positive after another round of optimistic covid vaccine/treatment news. We also saw news from U.S. politics to reduce geopolitical uncertainty in the markets.

Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
Overlay of Inverted JPY Pairs: 1-Hour Forex Chart
JPY Weekly Performance from MarketMilk
JPY Weekly Performance from MarketMilk

Japanese Headlines and Economic data

Monday:

No major Japanese news on the session, but we did see volatility pick up quickly in the financial markets, including in the Japanese yen. Risk sentiment moved positive once again to start the week on more covid vaccine news (Oxford-AstraZeneca Covid vaccine shows an average 70% effectiveness in preventing the virus, FDA authorizes Regeneron’s Covid treatment for emergency use), sending the yen lower against the majors during the U.S. session.

Tuesday:

Early in the Asia session, we saw a little boost in positive risk sentiment (i.e., more JPY weakness) on news that the Trump administration gave a go signal to Biden transition. The financial markets also seemed to move positively with rumors that President-elect Biden would tap former Fed head Yellen for Treasury.

BOJ’s Kuroda says no immediate need to overhaul policy framework

BOJ Kuroda calls for vigilance to financial imbalance risk

Wednesday:

Japan MOF panel urges wise spending, budget balance as focus shifts to post-COVID – “Suga has set digitalisation and environmental policy as core pillars of his growth strategy, with the aim of accelerating innovation and investment in the two areas. He has set an ambitious aim of cutting greenhouse gases to zero by 2050.”

Tokyo to call for shortened hours for bars, restaurants: – “The curbs are among Japan’s latest to rein in its highest surge in infections yet, with daily tallies exceeding 500 on several recent days in Tokyo.”

Thursday:

There was no major news from Japan or from the financial markets, especially with the U.S. markets closed for holiday.  We did see a slight lean towards risk-off on the session, possibly on the continued uncertainty of when a Brexit deal may come? (Ireland’s Coveney says EU-UK talks proving ‘very, very difficult’)

Friday:

The Japanese yen began to give back Thursday’s gains during the Asia session. It doesn’t seem to correlate with news from Japan, but the turn did come around news from China that industrial profits grew at the quickest monthly pace since early 2017. This may have sparked some risk-on sentiment during the session.

Japan’s capital sees prices fall most in over eight years as COVID-19 pain persists – The Dai-ichi Life Research Institute expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.