Yen Daily Fundamental Analysis

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US dollar was circulating at a four-month low against Yen in the trading session Tuesday after North Korea actually fired a missile across northern Japan. The action is a provocation made by Pyongyang, thus again triggering a global geopolitical tension between East Asia countries and also US.

 

The dollar fell around 0.4 percent towards 108.81 yen. USD / JPY even briefly hit a low of 108.33 early in the Asian session this morning. USD / JPY is moving steadily at the 108.795 low. The Japanese yen tends to strengthen in times of political turmoil or financial distress, as Japan is the largest creditor country and has a surplus current account.

 

Based on past patterns, where Yen always gets acquired from events like this, speculators immediately react to North Korean missiles and drag USD / JPY to low-low intraday. Also, it seems that  US, Japan, and South Korea is asking for PBB to talk about this issue makes the currency become uncertain but still in favor of JPY strengthening.

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Japanese Currency namely Yen strengthened against US Dollar, with its function as a safe haven, amid North Korean provocative action. On Friday session this morning, the country led by Kim Jong Un is back to make a mistake, that is deliberately fired missiles across the Hokkaido region, Japan.

 

US dollar also sank against Yen, with the candle needle lows USD / JPY price had touched around 109,549 shortly after the news was announced. At for now, USD/JPY is rise back up to 110,130. The rapid recovery occurred because the market has been preparing to face missile test of North Korea since some time ago. So, when the country really executes, the market is not too surprised.

 

North Korea missile fire across Japan this morning is the second since late last month. However, Japan is not trying to shoot down the missile and let it land 2,200 kilometers from the Pacific Ocean, according to a spokesman for the Japanese government.

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The Japanese yen was ahead against US dollar in trading session Tuesday this morning in connection with new developments on the Korean Peninsula. While the Euro looks to struggle at a four-week low against the US Dollar.

 

USD / JPY briefly touched the new level at around 112.530 in yesterday trading session. The euro also showed little change against the yen, where those pair or EUR / JPY is moving around 132,460 after falling more than 1 percent last night.

 

The yen harvested a fairly rapid gain after North Korean Foreign Minister Ri Yong-Ho said that US President Donald Trump was considered to have declared war on North Korea. The statement by North Korea's Foreign Minister was assumed by traders as a signal to return to safe-haven assets including the Japanese Yen. As a result, the Japanese currency also soared.

 

Another market focus today is the Fed Chairman Janet Yellen's Cleveland speech at with the topic of inflation, uncertainty and monetary policy.

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A number of Japanese economic data reportedly slick on Friday. Japan's core inflation accelerated in August and its industrial output increased more than expected. Labor demand is also still at its strongest level in 40 years. This is an indication that Japan's economic momentum is getting more solid.

 

The Core CPI, which takes into account oil prices but does not include volatile fresh food prices, increased 0.7 percent in line with market forecasts. The figure became the eighth monthly gain in the index, after a 0.5 percent rise in July.

 

Industrial output also posted a 2.1 percent gain in August, higher than expectations and earlier gains. Increased production of goods from the construction equipment, automotive, and electronic equipment sectors contributed to the increase.

 

The Japanese economic data are expected to boost optimism about the growth outlook, even though Prime Minister Shinzo Abe has decided to hold a sudden election which has an impact on rising uncertainty over Japan's economic policies. Following this report, the yen weakened against the US Dollar, with USD / JPY rising as much as 0.25 percent to 112.58 and extending to 112.64

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The US Dollar weakening theme dominated the market after the Christmas holidays. This, as well as the improving performance of Japan's economy, pushed the USD / JPY currency pair to move higher in the Asian session this morning (28 / December). Nevertheless, Yen is still observed to weaken against other major currencies amidst its monetary policy gaping.

USD/JPY is  falling down about 0.16% from the opening price towards 113.160. At the same time, EURJPY is still perched at around 134.791, its highest level since October 2015; and GBPJPY remains dependent on level 151,827, the highest since June 2016.

Japanese industrial production for November (preliminary) MoM rose about 0.6%, higher than the estimate and 0.5% increase in October. This is an increase in Industrial Production for the second consecutive month.

Meanwhile, YoY Retail Sales in November also increased 2.2%. This was a drastic reversal of -0.2% in the October period, well above the estimated 1.2% estimate previously estimated. Increased sales are mainly contributed by clothing and accessories, motor vehicles, and fuel (BBM).