Japanese Yen Flat, Tries to Gain on Commodity Currencies

The Japanese yen was about flat versus major currencies today. The yen was trying to rise against commodity currencies but so far it had limited success. Negative domestic macroeconomic data and the rise of crude oil prices were working against the Japanese yen but the pessimistic mood, which persists among investors, was working in favor of the Japanese currency.
The Statistic Bureau of Japan reported that the national core Consumer Price Index, which excludes fresh food, rose 0.4% in March, year-on-year, matching forecasts exactly. The index was up 0.6% in the preceding month. Month-on-month, the CPI fell 0.1%. According to a report from the Bank of Japan, the Services Producer Price Index rose 1.6% in March on an annual basis, missing the median forecast of 1.7% slightly and slowing from the previous month’s 2.1% rate of growth. The Ministry of Economy, Trade, and Industry released a report that showed a drop in the All Industry Activity Index by 0.6% in February after an increase at the same rate in January. Analysts were expecting a slightly smaller decline of 0.4%.
Yesterday, Markit released a flash estimate of manufacturing and services Purchasing Managers’ Indices for Japan in April. The manufacturing PMI dropped to 37.8 from 41.1 in March, while the services PMI plunged to 22.8 from 33.8. Joe Hayes, an economist at IHS Markit, commented on the results:

PMI data from Japan tell us about that the crippling economic impact from the global coronavirus pandemic intensified in April.

Prices for crude oil extended yesterday’s recovery today, with June futures for the WTI grade climbing more than 3% above $17 per barrel. But most analysts are skeptical that the recovery will last long and predict that the June contract will drop significantly, perhaps reaching the negative territory as May futures did. The negative outlook for oil prices and anticipation of a strong global economic recession will likely be supporting the yen in the foreseeable future.
USD/JPY traded at 107.65 as of 6:00 GMT today after opening at 107.56. EUR/JPY was at about 115.84 after opening at 115.95 and rising to the daily high of 116.07. NZD/JPY slipped from 66.60 to 64.42.

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