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It was a tough one for yen bulls this week as positive risk sentiment was the main driver to send JPY lower.  We also got another round of weak Japanese economic updates, likely contributing to the yen’s “biggest loser” status for the week.

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:

Rise in Japan’s first-quarter capex undercut by pandemic-driven profit slump

Japanese Manufacturing downturn gathers pace in May

Mixed Monday for the Japanese yen, overall a net loser as global risk sentiment was swinging positive to start the week. It’s likely traders were continuing to focus on the “reopening trade” and better-than-expected Chinese manufacturing PMI data, rather than the continued U.S.-China tensions &  mass U.S. protests over the weekend.

Tuesday:

Japan’s cash balance hits new high as central bank pumps money to combat pandemic

Selling in the yen picked up during the Tuesday London session, correlating with rising positive global risk sentiment (“reopening theme” & continued expectations of massive central bank stimulus), with a little boost from news that China bought U.S. soybeans after halt to U.S. purchases ordered

Wednesday:

Japan Services activity declines at substantial rate
once again in May

A little bounce for the yen during the Wednesday London session, correlating with the release of European and UK PMI data (improving but still showing severe contraction). Risk-on comes back during the US session on a refocus back to the “reopening trade,” covid vaccine developments (US should have a “couple hundred million” doses of a Covid-19 vaccine by start of 2021, Fauci says), and possibly on optimism from the Bank of Canada.

Thursday:

Bank of Japan sees no need now to buy municipal bonds

Another strong move lower in yen during the U.S. trading session, correlating with the latest statement from the European Central Bank that drew positive risk sentiment behavior after ramping up its pandemic bond buying to 1.35T euros.

Friday:

Japanese household spending down 11.1% y/y vs. projected 12.8% slump

Japanese leading indicators down from 84.7% to 76.2% vs. 76.3% forecast

On top of the weak economic updates above from Japan, the final round of yen weakness was likely on more positive risk sentiment vibes, this time supported by surprisingly better-than-expected jobs data from the U.S. (May sees biggest U.S. jobs increase ever of 2.5 million) and Canada (Canadian employment rose by 290,00).