HomeContributorsFundamental AnalysisJapanese Manufacturing Data Dips, But Yen Yawns

Japanese Manufacturing Data Dips, But Yen Yawns

It continues to be a quiet week for USD/JPY. In Tuesday’s North American session, the pair is trading at 111.14, down 0.06% on the day. On the release front, Japanese BSI Manufacturing Index slipped 7.3 points in the fourth quarter, its steepest decline since 2016. In the U.S., Core CPI edged down to 0.1%, shy of the estimate of 0.2%. CPI remained steady at 0.2%. Later in the day, Japan releases Core Machinery Orders and PPI. On Wednesday, the U.S. publishes PPI and durable goods orders data.

U.S. inflation numbers remain well below the Federal Reserve’s inflation target of 2.0 percent. This has given the Fed plenty of breathing room regarding rate hikes, as policymakers continue to signal that the Fed could hold off until the second half of the year. In a television interview on Sunday, Jerome Powell left no doubt about where the Fed stands, saying that the Fed would remain patient and did not felt any hurry to change interest rate policy. The dovish stance of the Fed could weigh on the dollar, as a lack of rate hikes makes the greenback less attractive to investors.

The markets are not expecting any changes in monetary policy from the Bank of Japan, which will hold a policy meeting later this week. There is little pressure on policymakers to raise interest rates, especially with the Federal Reserve and ECB putting a freeze on rate hikes for the time being. However, the BoJ is concerned that the Japanese yen could rise if the global economy takes a downturn in 2019, which would weigh on exports and push inflation levels lower. If the yen does move higher, the bank will have to consider additional stimulus in order to keep the currency in check. This means that it’s unlikely that the safe-haven yen will be posting significant gains in the next few months, barring geopolitical turmoil.

MarketPulse
MarketPulsehttps://www.marketpulse.com/
MarketPulse is a forex, commodities, and global indices research, analysis, and news site providing timely and accurate information on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors. This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.

Featured Analysis

Learn Forex Trading