Yen Looks Past Manufacturing PMI for Risk Trends and CPI Data
- Japanese Yen was little changed despite stronger manufacturing PMI growth
- Risk trends continue to be the key focus for JPY as well as looming CPI data
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The Japanese Yen failed to show much enthusiasm for a solid manufacturing PMI print of 52.8. Keep in mind, a reading above 50 indicates expansion while a level below means contraction. August’s preliminary report showed the manufacturing sector expanding at its fastest pace since May and up from 52.1 in July.
Today’s PMI reading also marked a twelfth consecutive month of expansion. According to the report: output, new orders and export orders rose at faster paces. In addition, employment increased as backlogs rebounded and optimism moderated.
JPY’s tepid reaction might have in-part been due to traders’ focus on its role within larger global risk sentiment dynamics. Indeed, the anti-risk currency was appreciating as the Nikkei 225 fell leading up to the data’s release. This also follows a jubilant Tuesday for the world’s major stock markets which in-turn saw the Yen depreciate.
Looking ahead there are a couple of major event risks that may stir Japanese yen volatility. July’s national CPI reading is due late into Thursday’s session. Currency Strategist James Stanley mentioned that a better-than-expected result may boost JPY. On Friday, we will hear from Fed’s Janet Yellen and ECB’s Mario Draghi during the annual economic symposium at Jackson Hole.