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Japanese Yen Soft as Market Sentiment Favors Risk

January 10, 2020 at 12:37 by Vladimir Vyun

Japanese coinsThe Japanese yen was weak today as the market sentiment continued to favor riskier currencies, not safer ones. Domestic macroeconomic data provided the currency no help, coming out withing expectations and signaling about the persisting weakness of the Japanese economy.

Investors were in a positive mood after the United States signaled that they will respond to the Iranian attack on US military bases with sanctions, not military actions. Meanwhile, Iran did not signal about additional attacks and said it wants to avoid conflict. With no signals of a full-scale war breaking up, the risk premium that was previously supporting the yen is now coming off the market, leaving for traders little incentive to buy the safe currency.

As for macroeconomic data, the Statistics Bureau of Japan reported that household spending fell by 2.0% in November, year-on-year, matching forecasts exactly. The decline followed the drop of 5.1% in the previous month. According to data from Japan’s Cabinet Office, the Leading Index fell from 91.6 in October to 90.9 in November. The index has been falling every single month since June 2018 with the exception of April 2019, when the indicator was stable.

USD/JPY edged up from 109.51 to 109.63 as of 12:36 GMT today. EUR/JPY was little changed at 121.66. GBP/JPY rose from 143.09 to 143.39.

If you have any questions, comments, or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

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