Japanese Yen Pauses from Recent Gains as Current Surplus Slips

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USD/JPY is trading sideways on Tuesday, after posting losses in the past three sessions. In North American trade, the pair is trading at 113.15, down 0.07% on the day. On the release front, Japanese current account surplus dropped to JPY 1.43 trillion, shy of the estimate of JPY 1.52 trillion. Later in the day, Japan releases Core Machinery Orders, which is expected to decline 3.6%. There are no U.S events on the schedule. On Wednesday, the U.S publishes PPI and the U.S Treasury Currency report, a semi-annual publication.

The yen has picked up where it left off last week, continuing to gain ground against the greenback. Since Thursday, USD/JPY has declined 1.3%, as the pair trades just above the 113 level. The yen posted slight gains on Friday, after mixed

Investors are keeping a close eye on the U.S Treasury’s currency report, which will be released on Thursday. In the most recent report, the U.S did not name any of its major partners as currency manipulators, but it did criticize China for the “non-market direction” of its economy. Since then, the Trump administration has imposed some $200 billion in tariffs on Chinese goods. China has retaliated with its own tariffs on U.S goods, and there has been speculation that China could respond to the U.S tariffs by devaluating the Chinese yuan, in order to bolster Chinese exports. In 2015 and 2016, the markets dropped sharply on fears that China would implement a major devaluation of its currency. The report should be treated as a market-mover.