The Yen is strong. Overview for 31.08.2020

At the end of last week, the Japanese yen grew significantly in pair with the US dollar. The current USDJPY quotation is 105.58.

In the morning, Japan published a block of interesting macroeconomic statistics. For example, retail sales in July fell by 2.8% (calculated per annum) compared to a decline by 1.3% previously. A decline had been forecast but not that deep, of course.

As for industrial production volume in July, preliminary calculations promise steep growth by 8.8% (calculated per month) – in June, it grew by only 1.9% (calculated per month), and growth of 5% (calculated per month) was expected. Liveliness of this sector means external demand and orders from abroad, which is good. To be legitimately optimistic, wait for this data to be confirmed by statistics for August; however, now we may already say that the situation is stabilizing.

The PMI digits in August weakened, decreasing to 29.3 against the previous digits of 29.5. Moreover, forecasts sometimes promise a decrease to 28.7.

Things in the housing market are going not that smoothly but this is explicable by zero domestic demand. The number of foundations laid for new houses in August dropped by 11.4% (calculated per annum) against the previous decline by 12.8%; the final digits turned out better than expected but they are still very disappointing.

The latest strengthening of the yen was provoked by a decrease in the demand for the USD, and for the Japanses economy, this is not the best of news.