THE TAKEAWAY: Japanese consumer prices contract for sixth month > BoJ easing yet to produce an effect > JPY unchanged
The Japanese Yen was little changed versus its major counterparts as consumer prices decreased 0.4 percent in October marking the sixth consecutive month of deflationary pressure throughout the Japanese economy. It appears the ‘seamless’ and ‘powerful’ monetary easing by the BoJ is lacking efficacy in their efforts to restore rising prices and put an end to deflation.
Household spending still showed signs of weakness contracting by 0.1 percent in October while the Jobless rate remained unchanged at 4.2 percent. Meanwhile, there was some positive news in this batch of data as industrial production rose by 1.8 percent on a monthly change basis, but fell 4.3 percent annually.
It’s unclear whether Forex traders will continue to sell the yen as risk sentiment which could be measured by changes in the S&P 500 appears to be approaching a .618 fibonacci resistance level and may result in another round of risk aversion potentially sending Forex traders into the safe-haven yen.
EUR/JPY, 15 Minute Chart
S&P 500, Daily Chart