The Yen continues retreating. Overview for 14.02.2019

USDJPY reached its six weeks highs; the USD is attacking.

The Japanese Yen is still retreating against the USD on Thursday afternoon. The current quote for the instrument is 111.00.

In the morning, Japan published a preliminary report on the GDP in the fourth quarter 2018. In the previous quarter, the indicator decreased by 0.6% q/q and market players expected it to recover by 0.4% q/q. However, it added only 0.3% q/q. On YoY, the GDP increased by 1.4% in the fourth quarter after losing 2.5% the quarter before. Based on today’s numbers, is it safe to say that the Japanese economy recovered? Definitely, because the components of the report show that the household consumption and business investment rebounded significantly after quite complicated third quarter. However, this recovery may not last long due to tough trade talks that are currently taking place in the global economy. Another thing that makes the outlook rather conservative is the increase of sales tax in Japan, as the country’s government is planning to raise national wide tax from 8% to 10% in October 2019.  

The longer the USA and China negotiate on their two-way trade, the more cautious the Japanese companies are going to be and the more reasons they will have to reduce the amount of capital investments. 

As a rule, the Yen doesn’t react to the statistics, unless they are very far from expectations. For a long time, the Japanese currency has acted as 100% speculative instrument, which was totally dependent on evaluation of risks on the market. However, right now the USD is in similar situation: it is favored, but once again, due to speculative news.