JPY: Neutral bias for the week ahead - Westpac

Robert Rennie, Research Analyst at Westpac, suggests that the next week is going to be a reasonable week in terms of key data in Japan with Q2 advance GDP and final IP next Tuesday and July trade data on Thursday.

Key Quotes

“Forecasts suggest that Japan will avoid the recent saw tooth positive/ negative pattern this last quarter with a meagre +0.2% annualised growth after +0.5% in the previous quarter. However, +0.2% would hardly impress, and given the strength of the ¥ at the tail end of the quarter, the risks are obvious. With Chinese exports disappointing in July, it’s hard to see much improvement in Japanese exports. Market liquidity should be thinned by those observing the annual Obon festival.

Last week we had no choice but to flip back to a neutral bias and we remain there this week. It feels as if the US$ is on the back foot after a payrolls-induced pop higher. With the market long and no obvious near term catalysts for further momentum beyond retail sales later this week, we remain very much on the sidelines.”