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As Global Economy Takes Plunge, JPY Rises in Value
How can the Yen be gaining so much strength with the recent economic crisis running at full speed? The Yen experienced a bullish trend versus the major currencies during last week's trading sessions, and was the only currency to outpace the rising USD. The Japanese currency gained over 150 pips against the USD when it closed trading at 104.61 last Friday, and opened today at 103.71. As the world's largest economies face difficulties, investment firms, such as Morgan Stanley, are telling their clients to buy up JPY, calling the Yen a "counter-cyclical currency." What this means is that as the world economy does poorly, the Yen tends to rise in value, as analysts are now forecasting a 5% rise in value over the next month for the JPY.
This week Japan will provide even more indicators to the economic calendar and will likely contribute to its currency volatility. The Overnight Call Rate, Core Machinery Orders, Leading Indicators, and Economy Watchers' Sentiment are all indicators which are expecting mixed results this week. However, traders should pay closer attention to the Bank of Japan's (BoJ) Press Conference, Monthly Report, and Monetary Policy Meeting this week for any hawkish indicators from Japanese officials, as they could define the JPY's direction this week more than the economic indicators. As for today, with no news being expected from Japan, speculation about the Overnight Call Rate, to be delivered tomorrow, combined with world economic news, will be the pilot of today's market movement.
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