Yen Little Changed as Industrial Sector Contracts, BoJ Concerned
THE TAKEWAY: Japanese industrial production contracted > Finance Minister Jun Azumi expressed concern over weak economy and high currency > USDJPY little changed
The Yen was little changed versus the U.S. Dollar as Japanese industrial production contracted by 1 percent in July on a month to month basis and shrank by 0.8 percent year over year. Bank of Japan’s Finance Minister Jun Azumi later said the central bank will decide stimulus based on exports and domestic demand. Furthermore, Azumi said the BoJ will take decisive monetary policy action if needed and won’t exclude any options on the forex market as recent yen gains have been one-sided and don’t reflect the Japanese economy.
The Japanese economy is heavily dependent on export led growth and a high exchange rate may drive importers to buy elsewhere prompting policy makers to attempt yen debasement. Over the coming months traders may be watching key economic data such as machine orders, industrial production, exports and currency fluctuation to gain clues as to whether the central bank will implement a more aggressive monetary easing policy.
USD/JPY, Weekly Chart
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.