JPY Daily News

Yen Closes a Bullish Week with Bearish Signals

The Japanese yen strengthened against most of the major currencies during the beginning of last week's trading session. The yen gained about 150 pips against the U.S. dollar and about 300 pips against the British pound. However, by midweek the yen corrected most of its gains, especially against the euro and the pound

The yen began last week with a bullish trend following positive data from the Japanese economy. The Preliminary Industrial Production report unexpectedly rose by 0.3% on July, beating expectations for a 0.3% drop, and rising for the first time in 3 months. In addition, Japanese retails sales rose by 3.9% in July, beating analysts' forecast of a 3.6% rise.

However, the bullish trend reversed by midweek following positive economic reports from the U.S. A number of publications have shown that the U.S. economy will probably evade another slowdown, as several economic indicators have shown better-than-expected results. This has boosted optimism in the global economic recovery and as a result increased demand for higher yielding assets, such as the euro and pound.

As for the week ahead, the most significant publication from the Japanese economy looks to be the Overnight Call Rate. The Over Night Call Rate is in fact the Japanese interest rates announcement for September. Analysts expect that the Bank of Japan (BoJ) will leave rates at 0.10%, the lowest in the industrial world. However, if the BoJ will unexpectedly decide to hike rates, heavy volatility is likely to take place.

Current Time: 05/27 00:23 GMT

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