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It was a rough time for Japanese yen bulls as the bears took it lower early in the week and was unable to recover. Dovish commentary from Bank of Japan officials and weak economic updates were the likely culprits for the yen’s under performance.

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 catalysts to be seen from Japan, but the Japanese yen fell across the board during the Monday session.  Broad global risk sentiment was negative during the Asia session (rising coronavirus headlines were the likely driver), so that was a bit of a head scratcher.  But risk sentiment switched to positive during the U.S. session, likely lifted by the bullish moves from US tech stocks, to possibly contribute to the yen’s weakness.

Tuesday:

Japanese flash manufacturing PMI fell from 38.4 to 37.8 vs. 39.5 forecast

BOJ core CPI up from -0.1% to 0.0% y/y

We saw Asia session volatility thanks to comments from Peter Navarro that the China deal was “over”, comments that he later walked backed. During the U.S. session, we somewhat of a broad move higher in the Japanese yen on no apparent catalyst, which was soon followed by a pullback as traders went with the positive risk vibes (driven again by U.S. tech sector strength).

Wednesday:

BOJ signals pause after months of pandemic-fighting stimulus steps

Bank of Japan may be in wait-and-see mode

Japan Services PPI down -0.3% in May vs. -0.1% in April

Mixed performance from the yen, but a net winner on the session, likely on risk sentiment moving negative.  Traders likely ran for safety as news of rising covid cases, negative global economic outlook, and geopolitical tensions (U.S. is considering $3.1 billion in new tariffs on products from France, Germany, Spain and the UK) came out through the day.

Thursday:

Japan All industry activity falls to 93.5 (-6.4%) in April m/m

Friday:

Tokyo June core CPI rises 0.2% yr/yr

BOJ’s Kuroda warns second-round effect of COVID-19 may dent economic growth

BOJ’s Kuroda says see no imminent need to lower entire yield curve

The Japanese yen bounced back against the majors during the Friday session, likely on the continued focus on coronavirus cases and states moving back into lockdown mode. The behavior was a little bit off from the norm as the yen fell against the other safe havens, likely an influence from earlier dovish commentary from BOJ Gov. Kuroda mentioned above.