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The Japanese yen takes the crown of biggest loser, once again on a round of weak economic updates and speculation of more stimulus from the Bank of Japan.

Broad risk sentiment was also swinging mostly positive on the themes of economies reopening around the world and covid vaccines being developed quickly.

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:

Japan will aim to shore up travel demand from late July

Tuesday:

BOJ Gov: Ready to do more for economy after state of emergency is lifted

Japanese all industries activity index sank 3.8% vs. previous 0.7% drop

BOJ core CPI down 0.1% vs. projected flat reading and earlier 0.1% uptick

Japan Services PPI +1.0% y/y in Apr. vs. +1.6% in March

On top of the negative Japanese economic updates and the Bank of Japan reiterating the possibility of doing more to support the economy, the round of weakness in the yen was likely also on broad positive risk sentiment (continued  recovery hopes and vaccine development news)

Wednesday:

Japan to boost this year’s bond issuance to nearly $2T

Japan approves fresh $1.1 trillion stimulus to combat pandemic pain

It was a rollercoaster session for the yen on Wednesday as traders’ focus swung back and forth between Japanese stimulus news, geopolitical tensions (e.g., U.S. weighs sanctions on Chinese officials, firms over Hong Kong), and rising positive sentiment on economies reopening and vaccine hopes.

Thursday:

With no direct catalysts from Japan, it’s likely the broad move lower in the yen against most of the majors during the London / U.S. session overlap was likely due to the continued positive global risk sentiment, which may have stemmed on the session from Europe as the bigger-than-expected recovery fund proposal may be brightening up the outlook in Europe.

Friday:

Japan finance minister sees fiscal situation worsening as virus hits tax revenue
Tokyo May core CPI rises 0.2% yr/yr
Japan Housing Starts -12.9% in Apr.
Japan’s industrial output hits fresh 7-year low in April
Japan’s factory, retail sectors slump as pandemic hits auto sector
Japan’s consumer mood higher in May but still ‘extremely severe’
Japan’s jobless rate rises to 2.6% in April

Negative commentary from Japanese government officials and Japanese economic updates were likely the main driver for the yen’s weakness during London session, which seems to have accelerated during the U.S. session on broad dollar weakness and as no negative surprises came from Trump’s press conference.