Safe-Haven Buying Boosts Yen Ahead of Manufacturing PMI Data

The Dollar/Yen closed lower on Monday as investors continued to move money into the safe-haven Japanese Yen in response to a major sell-off in riskier assets. The major U.S. stock indexes as well as other riskier assets ended lower after a volatile session, with investors wrestling with uncertainty and bank stocks dropping following harsh Western sanctions against Russia as it continued its invasion of Ukraine.

On Monday, the USD/JPY settled at 114.963, down 0.572 or -0.50%. Meanwhile, the Invesco CurrencyShares Japanese Yen Trust ETF (FXY) finished at $81.56, up $0.41 or +0.51%.

While the situation in Ukraine will continue to drive risk sentiment and consequently the direction of the USD/JPY, there was economic data from Japan and the United States of note. As well as new chatter about the upcoming U.S. Federal Reserve interest rate and monetary policy decisions.

Japan Economic News

The week started with Japan reporting on Preliminary Industrial Production, Retail Sales and Housing Starts.

Industrial output in Japan fell a seasonally adjusted 1.3 percent on month in January, the Ministry of Economy, Trade and Industry said on Monday. That missed expectations for a decline of 0.7 percent following the 1.0 percent drop in December.

On a yearly basis, industrial production sank 0.9 percent – again shy of expectations for a fall of 0.5 percent following the 2.7 percent increase in the previous month.

Japanese retail sales rose 1.6% in January from a year earlier, government data showed on Monday. That compared with a median market forecast for a 1.4% gain.

Japan’s housing starts continued to increase but the pace of growth softened in January, data from the Ministry of Land, Infrastructure, Transport and Tourism showed on Monday.

Housing starts rose 1.2 percent yearly in January, following a 4.2 percent increase in December. Economists had forecast an annual growth of 1.7 percent. Annualized housing starts fell to a seasonally adjusted 820,000 in January from 838,000 in the previous month.

Data also showed that construction orders received by big 50 contractors grew 11.0 percent year-on-year in January, following a 4.8 percent increase in December.