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Rising COVID cases and renewed lockdowns brought in the risk aversion vibes this week, and was likely the main driver for the yen’s broad outperformance as traders leaned into safe haven assets.

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

Tuesday:

Japan bank lending, deposits keep rising in Dec as pandemic strains persist – “Total deposits at the banks also surged 9.3% to a record 802.9 trillion yen”

Japan November current account surplus rises 29%, up for third month – “The current account balance, one of the widest gauges of international trade, registered a surplus of ¥1.88 trillion ($18 billion), staying in the black for the 77th consecutive month, the Finance Ministry said in a preliminary report.”

Japan Dec. economy watcher sentiment tumbles amid resurgent pandemic – “The diffusion index of confidence in current conditions compared with three months earlier among “economy watchers” such as taxi drivers and restaurant staff fell 10.1 points from November to 35.5, down for the second straight month following an 8.9 point drop in the previous month, according to the Cabinet Office.”

Wednesday:

BOJ will mull cutting this year’s growth forecast: Nikkei – “In its current projections released in October, the BOJ expects the economy to expand 3.6% next fiscal year following this year’s estimated 5.5% contraction.”

Japan expands COVID state of emergency as people cool to holding Summer Olympics

Japanese preliminary machine tool orders increased by 8.7% y/y

Thursday:

Japan Nov core machinery orders rise 1.5% month/month

Japan Dec wholesale prices fall 2.0 pct yr/yr

BOJ chief says Japan’s economic recovery likely modest amid pandemic

“To stem a further spread of the virus, Prime Minister Yoshihide Suga has declared a fresh state of emergency in 11 of the country’s 47 prefectures including the Tokyo metropolitan area as well as Osaka, Aichi and Fukuoka prefecture

The declaration, effective through Feb. 7, has rekindled fears of a double-dip recession. The 11 prefectures make up over half of the country’s economic output.”

Japan PPI for Dec. 2020: -2.0% vs. -2.3% in Nov. 2020

Friday:

Japanese tertiary industry activity fell by 0.7% instead of projected 0.3% uptick; -3.7% from the previous year.