Tokyo Week

  • Traders in Tokyo are predicting the most volatile return from “Golden Week” national holidays since Shinzo Abe became prime minister, as corporate earnings and a rising yen present “Abenomics” with one of its sternest tests to date.
  • Japanese and overseas investors alike will be taking a critical look at how the first three months of negative interest rates — introduced on February 16 — have dragged on the financial sector and the economy. Results from Mizuho Financial Group, Sumitomo Mitsui Financial Group and, the most negatively affected by the policy, Japan Post Bank, could well confirm fears.
  • Currency analysts are expecting post-Golden Week markets to test the Y105/$ level repeatedly — the exchange rate that an increasing number of Japanese corporates are now building into their profit assumptions for the current financial year.
  • An increasing number of forex analysts, however, expect a test of the Y100/$ level in coming weeks as Japan prepares to host the G7 leaders summit at the end of May.
  • The currency’s approach towards Y100/$ would see an effective reversal of the yen weakness that has driven Japan’s long bull market since Mr Abe came to power in 2012.

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