Yen Gains on Domestic Economic Reports, Market Sentiment

The Japanese yen gained against its major rivals today. While the currency has basically erased its gains versus the US dollar by now, it retained them versus other majors. Domestic macroeconomic reports released over the trading session were good, but the general risk-averse market sentiment likely played a bigger part in the yen’s rally.
The Tankan Manufacturing Index was at 19 in the December quarter, unchanged from the previous three months, while economists had predicted a small decline to 18. The Tankan Non-Manufacturing Index rose from 22 to 24 instead of falling to 21 as experts had expected. The Nikkei Flash Japan Manufacturing Purchasing Managers’ Index rose to 52.4 in December from 52.2 in November, in line with expectations. Industrial production expanded 2.9% in October, demonstrating the same rate of growth as in September, frustrating analysts who had forecast slowdown to 2.8%.
Macroeconomic data released in China today was disappointing, putting the market into a risk-off mode. That was beneficial to the yen, which is considered a haven in times when investors need safety.
USD/JPY opened at 113.62, dropped to 113.42 intraday but rebounded to 113.58 by 12:52 GMT today. EUR/JPY slumped from 129.03 to 128.21. GBP/JPY tumbled from 143.62 to 142.74.

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