The Japanese yen has been boosted recently by the decline of the equity markets by the end of last week on the new highs of oil prices above 140$ a barrel. The high oil prices dampen the demand and tackle the growth and can cause a stagflation. Last week we have seen again high inflation rates in Japan. May Core National CPI y/y has come at 1.5% from .9% in April and May National CPI m/m has come at 1.3% from just .8% in April but in spite of these inflation rate the bank of Japan has not signaled yet an increased probability of tightening its monetary policy in the face of inflation caring of the current weak global demand and feeble growth conditions and this is widely expected which may not add to the Japanese yen. Today we have seen the Japanese quarterly Tankan data which have shown a decline of the large manufacturers to 5 from 11 in the first quarter and the market was expecting 4. Tankan industrial Capex index came up by 2.4% better than the market expectations of just 2%. The big non-manufacturers came better than the expectations of 8 at10. The Japanese yen is trading around 106 versus the greenback right now after testing 105 on the prolonged dovish sentiment in the stock markets in the beginning of the week before rebounding later in the day.
Best wishes
FX Consultant
Walid Salah El Din
E-Mail: mail@fx-recommends.com
