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With several Asian centres off on Monday for the Chinese New Year holiday along with the U.S. President's Day, trading volume will be lower than normal as Japan releases fourth-quarter GDP data at 23:50GMT on February 14 and December industrial production and capacity utilisation figures on February 15 at 04:30GMT. Third-quarter GDP rose by 1.3% on an annualised basis and economists expect growth of 3.5% in the fourth quarter, which would make it the fastest pace since the first quarter of 2008, when a figure of 5.6% was recorded.
The latest data out of the Japan all point to improving economic conditions in regards to the leading indicator, key machinery orders and also consumer confidence as fiscal stimulus boosts household spending and an increase in demand from Asian countries give a boost to Japan's exports, however, comments from Japan officials still warn of the risk of deflation and also a chance of a double-dip recession after the country experienced four quarters of negative growth between Q2 2008 and Q1 of 2009.
Although the Nikkei-225 managed to climb back above the 10,000 level late last week as some risk appetite return to the markets (confidence towards a solution to the Greece fiscal debt problem increased), the yen has found itself on a weaker footing on a relative basis despite the fall in the eur/usd to a new low for 2010 (eur/jpy continues to hover above the almost one-year low at 120.70) and the Japanese currency is still unlikely to find support from positive data out of Japan.
Given the lack of liquidity in Monday’s Asian session, the preferred way to trade the yen is to sell the Japanese currency on the release of weaker-than-expected data (ideally waiting for a pullback before entering), with usd/jpy and gbp/jpy likely to provide the best risk/reward ratios.
Imperialfxonline
For comments and feedback, please email research@imperialfxonline.com
With several Asian centres off on Monday for the Chinese New Year holiday along with the U.S. President's Day, trading volume will be lower than normal as Japan releases fourth-quarter GDP data at 23:50GMT on February 14 and December industrial production and capacity utilisation figures on February 15 at 04:30GMT. Third-quarter GDP rose by 1.3% on an annualised basis and economists expect growth of 3.5% in the fourth quarter, which would make it the fastest pace since the first quarter of 2008, when a figure of 5.6% was recorded.
The latest data out of the Japan all point to improving economic conditions in regards to the leading indicator, key machinery orders and also consumer confidence as fiscal stimulus boosts household spending and an increase in demand from Asian countries give a boost to Japan's exports, however, comments from Japan officials still warn of the risk of deflation and also a chance of a double-dip recession after the country experienced four quarters of negative growth between Q2 2008 and Q1 of 2009.
Although the Nikkei-225 managed to climb back above the 10,000 level late last week as some risk appetite return to the markets (confidence towards a solution to the Greece fiscal debt problem increased), the yen has found itself on a weaker footing on a relative basis despite the fall in the eur/usd to a new low for 2010 (eur/jpy continues to hover above the almost one-year low at 120.70) and the Japanese currency is still unlikely to find support from positive data out of Japan.
Given the lack of liquidity in Monday’s Asian session, the preferred way to trade the yen is to sell the Japanese currency on the release of weaker-than-expected data (ideally waiting for a pullback before entering), with usd/jpy and gbp/jpy likely to provide the best risk/reward ratios.
Imperialfxonline
For comments and feedback, please email research@imperialfxonline.com