USD/JPY Fundamental Daily Forecast – Traders Looking for Direction from Investor Risk Appetite

The Dollar/Yen is inching higher on Monday after recovering from an early loss. The two-sided price action if being fueled by mixed equity markets in Asia and the United States.

Early in the session, Asia markets were under pressure, putting a dent in risk demand and driving investors into the safety of the Japanese Yen. However, Asian markets bounced off their lows and U.S. futures markets turned higher, making the U.S. Dollar a more attractive asset.

At 07:19 GMT, the USD/JPY is trading 109.795, up 0.013 or +0.01%.

Japan Economic Data

There were no major economic releases from Japan on Monday.

Japan Overall Bank Lending Climbs 1.9% on Year

Overall bank lending in Japan was up 1.9 percent on year in January, the Bank of Japan said on Monday – coming in at 545.433 trillion yen.

That exceeded expectations for an increase of 1.8 percent, which would have been unchanged from the December reading.

Excluding trusts, bank lending advanced an annual 2.0 percent to 475.330 trillion yen – matching forecasts and up from 1.9 percent in the previous month.

Lending from trusts rose 1.0 percent on year to 70.102 trillion yen, while lending from foreign banks skyrocketed 37.5 percent to 3.388 trillion yen.

Japan’s Current Account Surplus Increases in 2019

Japan’s current account surplus increased 4.4 percent in 2019 compared to a year earlier to reach 20.06 trillion yen (183 billion U.S. dollars), up for the first time in two years, government statistics revealed Monday.

In December alone, the country logged a current account surplus of 524.0 billion yen (4.77 billion dollars), marking the 66^th straight month of black ink, said a preliminary report released by the Finance Ministry.

In December, Japan had a goods trade surplus of 120.7 billion yen (1.10 billion dollars) and a services trade surplus of 24.5 billion yen (220 million dollars), while primary income registered a surplus of 400.1 billion yen (3.64 billion dollars).

In 2019, the surplus in goods trade stood at 553.6 billion yen (5.04 billion dollars), down 53.8 percent compared to 2018, as exports slid 6.3 percent to 76.12 trillion yen (690 billion dollars) and imports shrinking 5.6 percent to 75.56 trillion yen (690 billion dollars).

Meanwhile, primary income, which reflects overseas investments returns, saw a 20.72 trillion yen (190 billion dollars) surplus.

Daily Forecast

Today’s upbeat economic news from Japan is having little impact on the USD/JPY price action. Most investors remain focused on the direction of U.S. Treasury yields and U.S. equity markets. Traders are still trying to determine whether today will be a “risk-on” or “risk-off” session.

“Risk-On” and the USD/JPY will rise. Look for a decline if traders decide to shed risky assets.