The Yen got a little bit stronger. Overview for 28.02.2019

On Thursday, USDJPY is trading downwards; the Yen is acting as a “safe haven” asset.

The Japanese Yen is getting stronger against the USD on Thursday. The current quote for the instrument is 110.74.

The Yen is obviously following changes in the market sentiment – market players are watching the current situation and slowly buying “safe haven” assets, because they believe that global markets are ready for decline.

At the same time, the Japanese statistics were not just bad – the numbers were awful.

In the morning, Japan reported on the Retail Sales in January. The indicator added 0.6% y/y against the expected reading of +1.4% y/y. The Industrial Production lost 3.7% m/m over the same period. It was a preliminary report, but the reading was much worse than the previous and expected ones. 

The Industrial Production decline indicates problems with the export and domestic demand. As a result, one may expect the GDP to fall as well. 

These reports are a perfect example that the QE program in Japan is no longer as efficient as it should be. The program had to be either changed, which is very difficult, or closed in favor of other more effective tools. 

As a rule, the Yen doesn’t respond to domestic statistics, because it acts as a “safe haven” asset for the currency market. The same happened this time, but it doesn’t necessarily mean that the Yen won’t fall in the future in case of similar weak numbers.