July 7th is TANABATA. There are a lot of stories about the origin of TANABATA. The most well-known story is as follows.
A long time ago, TEN-KOU, the god of the sky, had a daughter called ORIHIME. Everyday she wove cloth for the Gods with a special machine called TANAHATA. It is believed that the word TANABATA comes from the name of this weaving machine, TANAHATA.
TEN-KOU was worried because his daughter worked every day and did nothing but weave. So he introduced her to a guy on the other side of the river named AMANOGAWA (to us it's the Milky Way). His name was HIKOBOSHI or KENGYU. KENGYU took care of cows and was a workaholic. (I am not sure why he has 2 names. But I think KENGYU means cow care-taker, and HIKOBOSHI is his actual name.)
When they met each other, they fell in love immediately, and spent all their time together. As a result, all the cows became sick and the gods' clothes became worn out, but there was no new cloth to make more.
This made TEN-KOU very angry and he stopped ORIHIME from meeting KENGYU anymore by taking her to the other side of AMANOGAWA. This made the two lovers so sad that they couldn't work. TEN-KOU also felt sorry, so he decided to let them meet each other once a year on July 7th if they worked hard.
Now, they work as hard as before and look forward to seeing each other only once a year.
Traditionally, people wished the sky would be clear on that day so the two could meet over the Milky Way. If it rained that day, the water level of the river AMANOGAWA got too high and could not be crossed.
People wished this by writing the wish on a piece of paper and hanging the paper on a bamboo tree. Nowadays, people write their own wish on the paper.
This is the most well-known story of TANABATA, even though there are many others.. It seems this story originally came from China.
In the Chinese Calender, there is almost always a half moon on July 7th and they believe ORIHIME and KENGYU use that half moon as a boat to meet each other over the great river in the sky, AMANOGAWA.