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Trump-Focused Yen Shrugs at Punchy Leading Index

Trump-Focused Yen Shrugs at Punchy Leading Index

David Cottle, Analyst


Talking Points

  • Two snapshots of Japanese economic performance bettered their highs for 2016 in November
  • However, the Yen failed to make any hay on this good news
  • Despite their timely reputation, even these numbers may now be too historic for markets squarely focused on Donald Trump

The Japanese Yen failed to capitalize Wednesday on news that two measures of local economic performance held to be more timely than most hit their highest levels for 2016 in November.

Japan’s national Leading Index came in at 102.7. That was just above the 102.6 level which markets had looked for and well above October’s 100.8 print. The index melds twelve sub-indexes focused on the current state of things like inventory ratios and machine orders.

And it didn’t come alone.

The Coincident Index is based on a similar composite of indicators and was released at the same time. It rose to 115.1 in November, from 113.5 in the previous month. Taken together the two suggest perhaps what markets already suspected: that the stronger US Dollar in the aftermath of Donald Trump’s election to the Presidency has been great news for Japanese exports.

The Yen had been in a fairly tight range through Tokyo’s morning session and these data did nothing to broaden that either way. Across Asia markets seem to be hunkering down before a key speech from the US President-elect, with Japans being no exception. The speech is expected to include some of the broad-brush policy outlines for which rapt markets are clamouring across the globe. However, it will come after Asian markets close on Wednesday and investors here seem inclined to stand clear if they can, until they see the colour of Mr. Trump’s money.

The US Dollar actually inched higher against the Yen in the aftermath of these numbers, in-line with its overall performance through the morning. USD/JPY got up to 116.117, from 116.039 just before they were released.

Meandering before the President-elect: USD/JPY

Chart compiled using TradingView

How’s the first-quarter going to go? DailyFX analysts put it on the line. Check out their forecasts here.

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.