The Dollar/Yen finished lower last week amid a drop in appetite for riskier assets. The stronger Japanese Yen was the product of a build-up of worries in financial markets, after U.S. tech stocks sold off and a leading coronavirus vaccine candidate faced a delay. The stock market slide spooked investors into selling riskier currencies, along with renewed worries about the fate of Brexit talks.

Last week, the USD/JPY settled at 106.147, down 0.096 or -0.09%.

Traders, returning from summer holidays, faced a number of risk factors that increased the appeal of the safe-haven Yen ahead of the fall trading season. They included the U.S. election in November, Brexit, U.S.-China trade tensions, central bank policy decisions, rising cases of the coronavirus – many of which would dent the appetite for riskier assets and inject strength into safe-havens.

Japan’s Second Quarter GDP Shrinks at Record 27.8% Amid Pandemic

Japan’s economy in the April-June period shrank an annualized 27.8 percent in real terms from the previous quarter, the sharpest contraction on record, as economic activity was restricted under a state of emergency during the coronavirus outbreak, government data showed last Monday.

The preliminary gross domestic product data corresponds to a 7.8 percent decrease on a seasonally-adjusted quarterly basis, marking negative growth for the third consecutive quarter, according to the Cabinet Office.

Weekly Forecast

Looking ahead to this week, Japan’s exports in August were expected to have suffered a double-digit contraction for the sixth straight month, a Reuters poll showed, underlining the sweeping impact of the coronavirus crisis on global demand and growth.

The poll on Friday also found consumer prices slumped to its lowest in more than three years, highlighting deflation risks and the challenge facing Japan’s next leader in engineering a broad revival.

The core consumer price index (CPI), which includes oil products but excludes volatile fresh food prices, is forecast to have declined 0.4% in August from a year earlier, the biggest drop since late 2016.

In other news, Chief Cabinet Secretary Yoshihide Suga is on course to succeed incumbent Prime Minister Shinzo Abe, who is stepping down for health reasons.

Central bank decisions from the Bank of Japan and the U.S. Federal Reserve will also be in focus this week.

The Bank of Japan is expected to offer a brighter view this week on the economy, pointing out that it is starting to recover from the devastating impact of the coronavirus pandemic, sources familiar with its thinking told Reuters.