It seems Ukraine-Russia tension is firmly back in focus after things had cooled while the nations went through negotiations.
However, this is out of the window and some investors fear we are back to square one. USD/JPY pulled back as the yen regained some strength due to its safe-haven appeal. There have been a raft of economic releases out of Japan this morning, which generally showed confidence is sharply retreating.
Household spending is down a whopping 5.9%, while the jobless rate is up to 3.8%. Both these figures were below expectations, but the inflation reads were broadly in line with consensus. This is mainly due to the effect of the sales tax hike and investors will continue to wonder what happens when that wears off.
Industrial production missed expectations but showed an improvement from the previous reading. All up, these readings showed just how fragile the economic recovery is, and it will only put pressure on the BoJ to keep this recovery going. That said, bar any further escalation in geopolitical risk, there is a good chance we’ll see investors buying the dips in USD/JPY on speculation the BoJ might have to do more.