The Japanese yen traded largely sideways today, though it slid against the Great Britain pound a bit and dropped versus the Swiss franc. The market sentiment was swinging between optimism and pessimism, making it hard for currencies to find a clear direction. Japanese macroeconomic data looked rather dire but not all reports turned out to be as bad as analysts were expecting.
Japan’s Ministry of Economy, Trade, and Industry reported that industrial production dropped 3.7% in March on a seasonally adjusted basis. Still, the drop was not as big as analysts had predicted — 5.0%. Retail sales plunged by 4.6% last month, year-on-year, matching forecasts exactly. According to a report from the Cabinet Office, the Consumer Confidence Index sank to 21.6 in April from 30.9 in the previous month. Experts were anticipating a smaller drop to 27.8.
Investors were hopeful that the global economy will start a recovery soon as countries across the world consider plans for an exit from lockdown measures. Easing lockdown or ending it outright should help economic activity to gradually return to the norm. But optimism was strained by the brewing conflict between the United States and China. US President Donald Trump blames the Asian country for the pandemic, an accusation Chinese authorities vehemently deny. Relations between the world’s two biggest economies were already worsening before the coronavirus outbreak, and if the conflict persists that can hurt the global recovery.
USD/JPY was about flat at 106.56 as of 12:07 GMT today. GBP/JPY rose from 132.90 to 133.32. CHF/JPY gained from 109.48 to 109.72, bouncing from the daily low of 109.17 — the lowest level since November 26.
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