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Yen Mixed on Macroeconomic Data, BoJ Monetary Policy Stance

September 30, 2019 at 14:08 by Vladimir Vyun

A fan of 10,000-yen billsThe Japanese yen was mixed today despite the market sentiment that was favorable to safer currencies. Domestic macroeconomic data was mixed, but there were more negative reports than positive ones. Additionally, Japan’s central bank signaled about the possibility of additional monetary easing soon.

Japan’s Ministry of Economy, Trade, and Industry reported that industrial production shrank 1.2% in August from the previous month on a seasonally adjusted basis after rising 1.3% in July. Analysts had predicted a much smaller decline of 0.5%.

Retail sales climbed 2.0% in August, year-on-year, after falling at the same rate in the previous month. The actual increase was noticeably bigger than 0.7% predicted by experts.

Housing starts dropped 7.1% in August from a year ago, accelerating its decline from 4.1% in July. That was a bigger decline than 6.1% forecasts by specialists.

The Bank of Japan released the Summary of Opinions at its September monetary policy meeting. The central bank voiced concern that inflation is losing its upward momentum and hinted that policymakers will consider making monetary policy even more accommodative at the next meeting:

Taking into consideration that it is becoming necessary to pay closer attention to the possibility that the inflation momentum will be lost, the Bank needs to reexamine economic and price developments at the next MPM.

The BoJ also stressed that it did not run out of means to prop up inflation:

In preparation for a situation in which there is a greater possibility that the momentum toward achieving the price stability target will be lost, it is important for the Bank to communicate with an emphasis that it has not reached an impasse on monetary policy measures in terms of either short- and long-term interest rates, quantity, or quality and that any kinds of measures are possible at all times.

USD/JPY was at about 108.01 as of 14:06 GMT today after opening at 107.96 and falling to the daily low of 107.74. EUR/JPY declined from 118.10 to 117.79, touching the low of 117.54 intraday. GBP/JPY edged up from 132.61 to 133.00. CHF/JPY sank from 108.87 to 108.38.

If you have any questions, comments, or opinions regarding the Japanese Yen, feel free to post them using the commentary form below.

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