Monday, July 13, 2009

No surprises in Japan, so why the yen sell-off this month?

Japanese industrial production is up again this month but the YOY change in still down 29.5% , like last month. Consumer confidence is up from last month but below expectations. Nevertheless, money is still flowing back to Japan as evidenced by the stronger yen. This money is not going into the stock market which has been in a nose-dive since the beginning of the month. If money has been flowing back to dollar as a safe haven, the flight to quality effect is even stronger in Japan especially relative to the commodity currencies. With a staggering economy. the flows to yen seem out of touch with rest of the world.

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