THE TAKEAWAY: Greater rhetoric of intervention > Weaker than previous industrial production > JPY Weakens
Despite weaker manufacturing data and higher inflation data, both suggesting more buyers for the Japanese yen, heavier rhetoric by Finance Minister Yoshihiko Noda suggesting unilateral Bank of Japan intervention weakened the Yen. The US dollar gained against all of its major counterparts despite the ongoing debt debate with the vote scheduled later tonight. Although Tokyo city-wide prices increased, Bank of Japan governor Shirakawa commented that short term price jumps will not shift long-term policy.
|
EVENT |
ACT |
EXP |
PREV |
|
Markit/JMMA Manufacturing PMI (JUL) |
52.1 |
50.7 |
|
|
Job-to-Applicant Ratio (JUN) |
0.63 |
0.61 |
0.61 |
|
Jobless Rate (JUN) |
4.6% |
4.6% |
4.5% |
|
Overall Household Spending (YoY) (JUN) |
-4.2% |
-2.3% |
-1.9% |
|
Tokyo CPI (JUL) |
0.5% |
0.0% |
-0.1% |
|
Tokyo CPI ex Fresh Food (JUL) |
0.4% |
0.2% |
0.1% |
|
Tokyo CPI ex Food, Energy (JUL) |
0.3% |
0.1% |
0.1% |
|
National CPI (JUN) |
0.2% |
0.2% |
0.3% |
|
National CPI ex Fresh Food (JUN) |
0.4% |
0.5% |
0.6% |
|
National CPI ex Food, Energy (JUN) |
0.1% |
0.1% |
0.1% |
|
Industrial Production MoM (JUN P) |
3.9% |
4.5% |
6.2% |
|
Industrial Production YoY (JUN P) |
-1.6% |
-1.2% |
-5.5% |
Tokyo Inflation (YoY). Chart generated with Bloomberg LP Professional Terminal.
The continued weakness and uncertainty in both domestic and world markets supported further risk aversion actions, although traders bought the US dollar in lieu of both the Japanese yen and the Swiss Franc. At the time of writing, the US dollar was up against all major counterparts, including 0.142% against the Japanese yen and 0.121% against the Swiss franc.
Although traders have largely ignored threats of intervention over the past days as the dollar traded under 80 yen to the strongest in 4 months, Finance Minister Yoshihiko Noda stepped up his rhetoric today. In a speech to parliament, the Finance Minister reported that the market continued to “diverge against fundamentals”, and will keep watching whether yen situation is “acceptable.” Additionally, he said that South Korea also has the same stance on currency policy, and will take bold actions against excessive moves.
USDJPY 5 minute chart; Vertical line indicates release of inflation data. Chart generated with FXCM Strategy Trader.
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