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.
Japanese Headlines and Economic data
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.
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 vaccine, J&J eyes one billion doses of potential COVID-19 shot in 2021)
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 EU, U.S. consumer price index rose 0.6% m/m in July) and growing vaccine hopes.
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.
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.