The Yen's depreciation took place due to three main factors. The first factor to weaken the Yen this week was the rise in Japanese stocks. This has damped demand for the Yen as a safe-haven. In addition, the Bank of Japan (BoJ) decided to leave the Japanese Interest Rates at 0.10%, the lowest in the industrial world. The BoJ's policy is to weaken the Yen in order to support the Japanese exports. This policy indeed weakened the Yen last week. The third reason for the Yen's weakness are speculations regarding a Greece rescue plan. This has increased risk appetite and lowered demand for safer investments such as the Yen.
This week traders should focus on two main publications from the Japanese economy, the Trade Balance and the Retails Sales. The Trade Balance will provide further evidence regarding the Japanese exports, and a positive result is likely to support the Yen. The Retail Sales are a primary gauge of consumer activity, and the market tends to promptly react to this publication. Analysts are forecasting that the Japanese Retails Sales have dropped during January. If the end result will be similar, it is likely to weaken the Yen.