- Marcel Thieliant, economist at Capital Economics
As geopolitical tensions are easing in Ukraine, the Japanese Yen has been weakening for a second day losing its appeal for investors as demand for safe haven currencies is falling. Along with that, Japan saw its industrial output falling more than expected in June, adding to concerns the nation's economy is cooling. The data release kept the Japanese Yen in the negative territory versus the Greenback to trade at 102.28, approaching its intra day low of 102.35 hit earlier in the trading session. Japan's industrial production declined 3.4% on a monthly basis in June, whereas factory output rose 3.1% from the previous year following the 1.0% advance a month earlier. The weaker industrial data may signal a downturn in the Japanese economy that expanded at a stronger pace than initially recorded in the three months to March, with a surge in private consumption ahead of the April 1 tax hike propping up the country's output. Japan grew at the 1.6% pace in the three months through March, whereas it is projected that the country's GDP may have slipped as much as 1.8% in the second quarter. Meanwhile, the Organisation for Economic Cooperation and Development said that Japan is showing signs of losing pace.
While the Japanese Yen is still considered to be a safe have asset investors turn to in times of geopolitical and economic crises, there has been a plenty of events in recent months urging investors to buy the Yen, thereby strengthening it.
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