The Japanese yen has ticked lower in the Thursday session. In North American trade, USD/JPY is trading at 111.79, down 0.12% on the day. On the release front, Japanese Preliminary Industrial Production slowed to 0.5%, well below the estimate of 1.9%. Japanese Housing Starts declined 4.8%, compared to the forecast of a 2.8% decline. Later in the day, Japan releases Tokyo Core CPI, with an estimate of 0.6%. In the US, unemployment claims edged lower to 238 thousand, below the estimate of 241 thousand. Personal Spending dropped to 0.3%, marking a 4-month low. Still, this beat the estimate of 0.2%.
Bank of Japan Governor Haruhiko Kuroda has insisted that the BoJ will not taper its massive stimulus program before inflation moves closer to the BoJ’s target of around 2 percent. However, the BoJ has recently sent out subtle hints that it could tweak stimulus by allowing long-term interest rates to move higher. With Japanese investors holding JPY 450 trillion overseas, any rise in interest rates could reverse the flow of investment, resulting in massive amount of funds being repatriated back to Japan. Such a move would have a profound effect on global markets and would likely boost the Japanese yen. Investors are keeping a close eye on the BoJ, as any hints regarding tapering stimulus or raising rates could trigger gains for the Japanese currency.
The US economy continues to perform well, and there was more good news on Wednesday, as Preliminary GDP for the third quarter posted a sharp gain of 3.3%. This was higher than the initial estimate of 3.0% and marked the fastest growth rate since Q3 of 2014. This was particularly impressive, as the southern US was battered by major hurricanes which caused significant economic damage. Consumer confidence levels are sky-high, but consumer consumption softened in the third quarter. However, business spending improved in the third quarter. Federal Reserve Chair Janet Yellen sounded upbeat about the economy, saying that the expansion was broad-based, across sectors of the economy.
