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After an early week dip, the Japanese yen stormed back on several negative risk catalysts throughout the week to take the top spot among the major currencies!

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:

Tokyo Sees Most Virus Cases Since May 5 as It Eases Restrictions

Japan Tertiary Industry activity: -6.0% m/m in April

Strong pop higher in the yen against the majors during the Asia session, possibly on global risk-off sentiment thanks to rising coronavirus cases headlines (Beijing Locks Down Part of City After Virus Outbreak at Market) and weaker-than-expected Chinese data.

But global risk sentiment shifted back towards positive during the U.S. trading session to likely send the yen lower after better-than-expected U.S. economic data (Empire State index shows stable conditions in June after two months of record declines) and an announcement from the Federal Reserve that they will start buying individual corporate bonds.

Tuesday:

Bank of Japan holds fire, pledges $1 trillion to struggling firms

BOJ Governor Kuroda’s comment highlights at news conference

The Japanese yen continued to lose its footing during the Tuesday Asia and London session, but risk aversion sentiment picked up during the U.S. session to give yen bulls some legs. This was likely a reaction to Fed Chair Powell’s testimony that the Fed will not be aggressive with corporate bond buying and that the economy faces “significant uncertainty” on a recovery. 

Wednesday:

Japanese trade deficit narrowed from 1.04T JPY to 0.60T JPY

Bank of Japan boosts its coronavirus stimulus plan to more than $1 trillion amid ‘extremely severe’ economic crash

Thursday:

There was no major news or headlines from Japan during the Thursday session, but it was a busy one for risk sentiment as a flow of headlines kept the markets moving from Asia through the U.S. session.

We saw risk-on sentiment during Asia trading (likely a reaction to weak New Zealand GDP data and huge job losses data from Australia), but traders got a bit more bullish on risk during the London session (possibly on more stimulus coming from the BOE and/or China’s pledge of economic support).

Risk sentiment flipped back to negative during the U.S. session to send the yen higher, likely a reaction to weaker-than-expected U.S. unemployment data and rising coronavirus cases headlines.

Friday:

Japanese national core CPI down by 0.2% vs. projected 0.1% dip

Major central banks to cut frequency of dollar-funding operations, BOJ says

Japan’s Deflation Gathers Momentum as Prices Extend Declines

The troubling Japanese inflation update above was likely a contributor to the yen’s weakness during the Asia and London sessions, but yen bulls were able to make one last push higher into the weekend thanks to negative risk sentiment during the U.S. session. Once again, it was coronavirus fears that sparked the risk-off rally, this time off of news that Apple will close some stores again in states that are seeing a resurgence of Covid-19 cases.