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Japanese economic updates were arguably net positive, but the Japanese yen was a net loser on the week, influenced more by positive global risk sentiment and counter currency flows.

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 data from Japan meant a mixed session for the Japanese yen, starting the week on weak footing as broad risk sentiment leaned positive off of improving economic data from China.

Tuesday:

Japan banks keep lending at record pace in July as pandemic pain persists

Japan’s 2020 1st half current account surplus lowest in over 5 yrs

Japan’s service sector sentiment improves in July

Japan’s economy watcher sentiment almost back to pre-pandemic level

Despite the net positive updates from Japan, the yen was a loser on the session, likely on positive global risk sentiment. For this session, traders were likely moving into risk assets on positive COVID-19 vaccine related headlines (Russia has registered the world’s first coronavirus vaccineJ&J eyes one billion doses of potential COVID-19 shot in 2021)

Wednesday:

Japan M2 Money stock up +7.9% y/y in July

Another round of JPY selling, once again likely on broad positive global risk sentiment. There doesn’t seem to be a single catalyst for the sentiment, so it’s likely a reaction to positive economic updates from around the globe (e.g., Industrial production up by 9.1% in both euro area and EUU.S. consumer price index rose 0.6% m/m in July) and growing vaccine hopes.

Thursday:

Japan’s producer prices up for 2nd month in a row

Another mixed but net negative session for the Japanese yen thanks to broad risk sentiment. Today, traders’ risk appetite may have been sparked by more positive economic updates, including improvement in Australia employment situation, UK’s housing market booms, and U.S. initial claims fall below 1M for the first time since the economy crashed in March.

Friday:

Japanese tertiary industry activity index rose 7.9% vs. 6.4% forecast

Broad risk sentiment turned negative ahead of the weekend, likely supporting the Japanese yen in the process. Traders may have taken some risk off ahead of the weekend as we continued to see uncertainty with U.S. stimulus plan. It’s also likely that while are are seeing improvements in global economic updates, it may not be strong enough to spark confidence for further risk taking.