The Yen is attacking again. Overview for 28.12.2018

On Friday morning, USDJPY is falling; investors are interested in “safe haven” assets again. 

At the end of the final December week, the Japanese Yen is getting stronger against the USD. The current quote for the instrument is 110.65. Investors are once again in need of “safe haven” assets, that’s why the Yen is rising despite unimpressive statistics. 

The numbers published today showed that the Unemployment Rate in Japan increased up to 2.5% in November after being 2.4% in the previous month and the same market expectations. As a rule, the Yen barely responds to the labor market data, so the reading didn’t make the currency more volatile. 

The Retail Sales added only 1.4% y/y in November, which is worse than both the month before (+3.6% y/y) and the expected reading (+2.1% y/y). This is a really unpleasant surprise, because the weak number may indicate that the Japanese population is again switching to saving money due to not very promising economic outlook for the next year. 

The preliminary Industrial Production report showed -1.1% m/m in November after adding 2.9% m/m in October. However, market expectations were even worse, -1.7% m/m. 

The Tokyo Core CPI was only 0.9% y/y in December after being 1.0% y/y the month before. However, the indicator was expected to fall. The Tokyo number is considered as some kind of a leading indicator, that’s why the current slowdown may be rather alerting, meaning that the inflation in the entire country may have decreased as well. It’s not a very good New Year present for the Bank of Japan and its plans to continue the QE program as long as it takes.