​Yen Decreases After a Rapid Growth (Weekly Review)

The new 2019 year began with rather unpleasant surprises for financial markets. Apple's lower profit forecast due to the situation in the Chinese market triggered further sales in stock markets, along with a so-called flash crash - a sharp drop by several hundred points in pairs with the Japanese yen, in particular, USD/JPY, EUR/JPY, and GBP/JPY after the New York Stock Exchange was closed.

It should be noted here that Apple’s decrease in profit forecasts could hardly have caused such a collapse of these pairs, moreover, the fall in stock indices was quite moderate, so the reason could be low liquidity, under which protective orders worked. Moreover, the growth of the JPY has not continued, and its competitors have been recovering throughout the week, and maintain a positive mood for the current moment, as well as stock indices.

Negative for the yen and positive for the indices was the news of scheduled negotiations for the settlement of the trade conflict between the US and China this week. In anticipation of positive results, investors buy out shares and get rid of long positions in the yen, while the USD, strengthening against the JPY, is under pressure from its European competitors, although data on the US labor market published on Friday significantly exceeded analysts' forecasts. Despite the “soft” tone of the Fed's comments, the differential in interest rates is still a factor supporting the USD, and in the face of political and economic risks in the Eurozone and the UK, the euro and the pound remain vulnerable.

Schedule for this week:

Tuesday, January 8
08:30 GMT – United Kingdom. Halifax House Price Index;
10:00 GMT – Eurozone. Business Climate Indicator;
13:30 GMT – USA. Trade Balance (Nov);
13:30 GMT – Canada. Trade Balance;
20:00 GMT - USA. Consumer Credit.

Wednesday, January 9
07:00 GMT - Germany. Trade Balance n.s.a.;
07:00 GMT - Germany. Trade Balance;
07:00 GMT - Germany. Import/Export;
08:00 GMT – Eurozone. ECB Meeting;
10:00 GMT – Unemployment Rate;
13:15 GMT – Canada. Housing Starts;
15:00 GMT – Canada. Bank of Canada (BOC) Interest Rate Decision;
15:00 GMT - Canada. Bank of Canada (BOC) Rate Statement;
15:00 GMT - Canada. Bank of Canada (BOC) Monetary Policy Report;
15:15 GMT - Canada. Bank of Canada (BOC) Press Conference;
15:30 GMT – United Kingdom. Bank of England Governor Mark Carney Speaks;
19:00 GMT – USA. Federal Open Market Committee (FOMC) Meeting Minutes.

Thursday, January 10
23:50 GMT – Japan. Foreign Stocks Buying;
23:50 GMT – Japan. Foreign Investments in Japanese Stocks;
01:30 GMT – PRC. Producer Price Index (PPI);
01:30 GMT - PRC. Consumer Price Index (CPI);
12:30 GMT – Eurozone. ECB Publishes Account of Monetary Policy Meeting;
13:30 GMT - USA. Initial Jobless Claims;
15:00 GMT - USA. New Home Sales.

Friday, January 11
21:00 GMT – Australia.  AIG Construction Index;
09:30 GMT - United Kingdom. GDP (MoM) (Nov);
09:30 GMT - United Kingdom. Goods Trade Balance;
09:30 GMT - United Kingdom. Trade Balance;
09:30 GMT - United Kingdom. Manufacturing Production;
10:00 GMT - Eurozone. ZEW Economic Sentiment;
13:30 GMT - USA. Consumer Price Index (CPI) excluding food products and energy products;
13:30 GMT - USA. Core Consumer Price Index (CPI).

Author: Anthony Porter, IAFT Analyst