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USD/JPY Weekly Outlook: Bearish Weekly Candlestick Might Weigh on Pair
Major Japanese data will be released on Wednesday, with the current account expected to decline slightly in April. Moreover, GDP for the first quarter should tick higher to 0.5% from -0.3% previously while the yearly print is forecast to expand 1.9%, up from the -1.1% booked in the Q4 of 2015.
On Thursday, core machinery orders for April will be out and should crash both on a monthly and yearly basis, which might have a large impact on the yen.
Friday will bring the PPI index from Japan for May and it should stay at -4.2% year-on-year and improve to 0.1% on a monthly basis, from -0.3% booked in the previous month.
"The Japanese yen remains the top performing G10 currency so far this quarter and is up 5.6% in Q2 to date. Given the above view of the FOMC delaying until July and given the probability that ‘Brexit’ fears are set to escalate over the coming weeks, we can only see the yen continuing to perform well in the short-term," analysts at Bank of Tokyo-Mitsubishi said on Friday.
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Japanese Economy Healthier Than First Thought in Q1
A bigger rise in consumption last quarter and a smaller decline in investment than previously reported saw Japan's economic growth figures for the March quarter revised higher on Wednesday.
The world's third-largest economy expanded 0.5% in the first quarter, according to the final GDP estimate from Japan's Cabinet Office on Wednesday, coming in slightly better than the 0.4% expansion initially reported. On an annualized basis the economy grew 1.9% last quarter.
Household consumption grew 0.6% in the March quarter, up from 0.5% in an initial estimate, while investment in plant and machinery was previously thought to have declined 0.9%, but today's figures confirmed that the contraction was actually around 0.7%.
Private non-residential investment shrank at half the pace first reported, declining 0.7% over the quarter, however, inventories made a slightly negative contribution to GDP, rather than making no contribution as first reported.
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Japan Machinery Orders Fall at Fastest Pace in 5 Months
Orders for new machinery, excluding large orders such as utility items and ships, fell at the fastest pace in five months in Japan in April.
Core machinery orders fell 11% month-on-month in April, according to Japan's Cabinet Office, coming in much softer than the 3.2% decline forecast by analysts.
The decline was led by the manufacturing sector, where machinery orders slumped 13.3% in April, while non-manufacturing orders slid a more moderate 3.9%.
"Today’s figures point to a renewed fall in [non-residential investment] in the second quarter," Japan economist at Capital Economics Marcel Thieliant said in a note. "What’s more, “core” capital goods shipments, another reliable leading indicator of capital spending, suggest that business investment will at best stagnate this quarter."
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USD/JPY: Pair Declines as Sentiment Worsens
The sentiment worsened on Thursday, evident from falling stocks and higher yielding currencies (kiwi excluded), which benefited the yen. The USD/JPY pair erased all this week's gains and dropped to the important support of ¥106.50, where it was trading during the London session, 0.5% weaker on the day.
Should the pair decline below ¥106.50, a further drop toward the actual lows of ¥105.60 is likely. On the other hand, the daily resistance is seen at ¥106.80 and at ¥107.15 afterwards.
Bank of Japan (BoJ) Deputy Governor Nakaso was in the wires overnight, confirming the strong commitment of the BoJ to the 2% inflation target. Nakaso also commented on Japan's economy, saying that the slowdown is international economy related and that the downside risk to the global economy from unstable market moves are still high.In the previous session, the final revision of Japan GDP for the first quarter showed that the economic output expanded 1.9% year-on-year, up from -1.1% in the previous quarter, while the quarterly change swelled to 0.5% from -0.3% booked previously. The yen held mild gains after these numbers.
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USD/JPY forecast for the week of June 13, 2016
The USD/JPY pair initially tried to rally during the course of the week but turned back around as we ran into quite a bit of resistance. The resulting candle was a bit of a shooting star, so looks like the sellers still have plenty of control in this market. On the other hand, if we can break above the top of the shooting star, the market could very well reach towards the 110 level above as it was previous support and resistance. On the other hand, if we make a fresh, new low, we will more than likely reach towards the 105 level, and a break down below there probably has the market looking for 102.
USD/JPY: Buck Tries to Stay Above 18-Mth Low, Fights Safety Call
The greenback managed to partially erase earlier losses against the Japanese yen during US trading hours, amid a data-void session on Monday.
However, the increasing demand for safe-haven asset classes strongly favored the yen, thus the cross found itself within 30 pips of the eighteen-month low at ¥105.52 booked March 3.
The proxy of safety received strength following the latest polls from the UK, which showed an unexpected turn around of the odds of the nation leaving the EU after the upcoming referendum.
"All eyes are on the Brexit polls," Credit Agricole's head of G10 currency strategy Valentin Marinov, said. "The yen is among the preferred safe havens at the moment, both because of its positive correlation with risk aversion and because it's geographically removed from the UK."
As a result, the pair was seen 0.71% lower at ¥106.14, dwelling above an intraday low of ¥105.74, while the US dollar index lost 0.21% to 94.43 on Monday.
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BOJ "struck a moderately confident tone on domestic trends"
Some responses to the Bank of Japan decision today
"Japan faces high hurdle to yen intervention"
The Nikkei today have a piece up on yen intervention
USD/JPY forecast for the week of June 20, 2016
The USD/JPY pair fell significantly during the course of the week, breaking down below the 105 level. That being the case, the market looks like this significant breakdown could lead to much lower levels. The market will more than likely try to reach down towards the 100 level now, so at this point in time it’s likely that the sellers will continue to push this market going forward. However, I believe that it will be easier to trade off of shorter-term charts at this point in time as the Bank of Japan is most certainly paying attention.
USD/JPY: Yen Snubbed as Traders Put Faith in 'Bremain'
Traders ditched safe-haven assets including the yen on Monday after a weekend poll put the 'Remain' camp ahead of 'Leave' voters just days before official polls open for Britain's EU referendum.
The USD/JPY pair rose 0.53% to 104.63 on Monday morning in Tokyo from Friday's close of 104.16, hitting a morning high of 104.85.
The EU referendum phone poll conducted by BMG Research/Herald Scotland found that some 46% of voters would opt to remain in the trading bloc, while 43% wanted to leave. The remaining 11% were still undecided.
Last week's tragic death of Labor MP Jo Cox appears to have increased support for the 'Bremain' campaign, which is now leading in most polls and has much stronger odds among bookies than a week ago.
A vote to remain part of the EU at this week's referendum has come to mean greater stability for the economy and financial markets.