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Overly Positive Eurozone Results Trigger EUR-JPY Rise against Continuing Japanese Concerns

Published: 8 Sep at 12 PM Tags: Euro Exchange Rate, Currency Exchange, Euro Crisis, Yen Exchange Rate, UK, Exchange Rates, Inflation,

The Euro advanced strongly against the Japanese Yen today; this comes after the release of both the Eurozone and Japanese Q2 GDP data. Both currencies had their figures print positively with regard to estimates, but the outcome of the Eurozone results was far superior, seeing the single currency exchange rate stick around 133.9939 after the relevant GDP results were announced. These included a rise from 1.2% to 1.5% in the annual figure but a fall from 0.5% to 0.4% in the quarterly outcome. This was an improvement on predictions, however, which had forecast a drop to 0.3%.

For the Japanese results, the quarterly and annual GDPs both showed contraction, by -0.3% and -1.2% respectively. However, as with the quarterly Eurozone result, these declines had been predicted and were better than anticipated. The Yen and the Euro have also been hindered and helped by additional publications around the same time of their GDP results today. For the Yen, this included the Trade Balance of Payments Basis for July falling by -¥108bn. The Eco Watchers Surveys for August also showed a decline in Japanese expectations, with the current forecast dropping from 51.6 to 49.3 and the Outlook variant dropping from 51.9 to 48.2. On the other hand, Bank Lending for August, both including and excluding Trusts, rose compared to the previous figures.

The Euro was helped out by the German monthly Exports and Imports figures for June, which showed rises both above expectations and against previous negative postings.

Scarcity of Eurozone Data may Undo Common Currency’s Current Gains in EUR-JPY Conversion Rate

Despite having a strong showing today, the Euro may not be able to hold onto this current lead for the rest of the week. This is primarily due to the fact that the next pieces of major data coming out of the Eurozone are not due until Friday, which gives the Yen two uninterrupted days of results to rise against the single currency. Wednesday has the Japanese Consumer Confidence Index for August coming out, along with the number of annual Machine Tool Orders for August. No forecast has been made for the latter result, but if the marginal predicted gains are accurate for the former field, this could be the start of a downtrend for the Euro in the pairing.

On Thursday, Japan’s Machine Orders and Foreign Bond Buying statistics are due for publication. However, the announcement of the crucial Chinese New Loans and Aggregate Financing figures for August on the same day may unsettle any uptrend inspired in the Yen against the Euro. This comes from China’s status as Japan’s biggest trade partner; a dip in the Chinese figures are unlikely to be any cause for optimism across the sea to the east, so the Euro still has the potential to hold onto its current spoils until the German inflation rate for August is announced on Friday.
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