Japanese Yen Flat Despite Strong Machinery Orders
THE TAKEAWAY: Japanese Machinery Orders Beat Estimates > Data Comes Before Release of BoJ Minutes on Wednesday > Yen Trades Flat
The Japanese Yen was flat immediately after the release of data showing a strong rise in machinery orders in August. As of 00:10 GMT, the currency was trading within a 20-pip range around 76.70 versus the US Dollar.
The Cabinet Office reported that machinery orders in August, excluding shipbuilding and utilities, jumped 11 percent month-over-month. The figure beat expectations for a 3.9 percent rise. Over the same month last year, orders unexpectedly rose, posting an increase of 2.1 percent.
Orders by manufacturers rose 13.7 percent, after a 5.2 percent drop in July, suggesting a recovery in industrial production is underway. The machinery orders figure comes after mixed economic data pointing to a modest recovery despite continued weakness abroad. Earlier this week, Japan reported a worse-than-expected trade deficit and a larger-than-anticipated fall in the country’s current-account surplus. At the same time, the September Tankan Large Manufacturers’ Index moved into positive territory, indicating that optimists outnumbered pessimists. Against this backdrop, the Bank of Japan opted last week to keep both its benchmark interest rate and existing liquidity programs unchanged.
The Yen will likely continue to trade in a narrow range in anticipation of the minutes from last week’s BoJ meeting and the Services Index, both to be released on Wednesday. Markets will be on the lookout for policymakers’ assessment of economic conditions and for signs of further intervention to weaken the currency.
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