Yen Propelled By Strong Core Machinery Orders Data

Yen Propelled By Strong Core Machinery Orders Data
June 13, 2019


The Japanese yen continued to strengthen against the greenback as investors’ risk appetite is waning due to declining expectations for Trump-Xi talks along the sidelines of G20 meeting. Strong domestic macroeconomic data also buoyed the yen. The USD/JPY pair fell from a high of 108.50 to a low of 108.10 in the past 24 hours.

Japan’s Cabinet Office reported that core machinery orders increased by a seasonally adjusted 5.2% m-o-m in April, following 3.8% advancement in the earlier month. Analysts had anticipated the core machinery orders to decline 0.8% in the reported period. The value of core machinery orders stood at ¥913.7 billion at the end of April.

Core machinery orders increased 2.5% on a y-o-y basis, blowing away analysts anticipations for a 5.3% decline. In March, core machinery orders dropped 0.7%.

The total value of machinery orders received by 280 Japanese manufacturers has seen a 4.3% rise. However, on a yearly basis, the total value of machinery orders declined by 5.50% in April to ¥2.352 billion.

Manufacturing orders rose 16.3% m-o-m in April, but down 8.2% on a y-o-y basis to ¥400.10 billion. Non-manufacturing orders grew 1.2% m-o-m in April and 12.6% on y-o-y to ¥517.60 billion.

Government orders surged 93.4% m-o-m and 12.7% y-o-y to ¥294.6 billion. Likewise, orders via agencies increased 4.4% m-o-m and 3.3% on y-o-y basis to ¥131 billion. However, orders from overseas plunged 24.7% in April and 18.3% on y-o-y basis to ¥808.3 billion.

The Bank of Japan stated that the Corporate Goods Price Index rose 0.7% y-o-y in May. While the gain met analysts’ forecasts, it was lower than the 1.3% increase recorded in April. Furthermore, the Bank of Japan stated that producer prices declined 0.1% m-o-m in May. That missed economists’ estimate of a flat reading following the 0.4% rise in the earlier month.

On y-o-y basis, producer prices increased 0.7%, which is in accordance with economists’ anticipations, following the 1.3% advancement in the earlier month. The Bank of Japan revealed that the export prices declined 1.4% m-o-m and 2.7% on a y-o-y basis. Notably, import prices fell 0.3% m-o-m in May and 1.4% on a y-o-y basis.

In addition to the economic data, rising tensions between the US and China is forcing investors to invest in safe haven assets.

Shi Yinhong, a global relations expert from China’s Renmin University, said the country does not anticipate any progress in the trade talks, ahead of the G20 meeting in Japan, due to stressful bilateral relations.

Shi said Trump’s public threats have placed Xi “in a very disadvantageous position,” as any deal “would be seen as being weak or surrendering to US pressure.”

The positive core machinery order data and US-China trade tensions are expected to keep the yen bullish in the short-term.

The historical price chart indicates that the USD/JPY pair has broken the support level at 108.50. The next major support is anticipated only at 106.50 levels. The currency pair is moving within a descending channel. Furthermore, the stochastic indicator is in the bearish region. As a result, we can expect the currency pair to move down in the short-term.

JPY - technical analysis -13th June 2019

Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.



Sammy is our forex expert, with over 20 years experience in the financial sector, she will be keeping you up to date with the ups and downs of currencies around the world

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