Yen falls sharply in Asia

It has been a quiet start to the week for the FX space with limited moves in the major FX pairs.

The yen crosses have continued to be a focal point, with yen weakness setting the tone early in Asia and helping to drive equities. USD/JPY has trumped last week’s highs and traded as high as 108.8 in Asia. While there aren’t any major releases in Asia today, the favourable risk mood seems enough to keep driving yen weakness.

Busy week for Japan

From Japan this week we have monetary policy meeting minutes due out tomorrow, which are expected to show officials unanimously agreed to continue with the easing/stimulus program. At the end of the week we have retail sales, manufacturing PMI, household spending, CPI, unemployment rate, industrial production and housing starts data due out. CPI is always a talking point given one of the BoJ’s key mandates is its 2% inflation target at the moment.  I will also look out for weekly fund flows data on Thursday for an indication of outflows/inflows.

US housing and consumer data in focus

On the US side, it’ll be a shortened trading week with the Thanksgiving holiday on Thursday, which means no US leads for Asia on Friday. US data kicks off with pending home sales data due out at 14.00 AEDT. Having been down for four consecutive months, the market is looking for this losing streak to be snapped with a 2.2% rise. This will be followed by housing starts and the Case-Shiller readings over the next couple of days as the market will continue to assess the state of the US housing market. This week will be crucial for some of the interest rate sensitive sectors of the US economy, with the holiday shopping season ramping up.

Black Friday will be watched closely from a retail perspective as well as readings on housing and capital goods. While last week was dominated by Fedspeak, this week will be much quieter on that front, which makes the few releases due out important for the USD.

USD/JPY rallies through July highs

Positive signs from all these key economic readings could trigger a fresh round of USD buying and push USD/JPY even higher heading into the back end of the week. Today’s move saw USD/JPY breach July highs at around 101.54, which leaves May highs of 103.74 in focus.

USD/JPY

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