DailyFX.com –

Talking Points:

  • Yen steady as a set of important economic data crossed the wires
  • Core CPI inflation in September rose 0.9 percent on a year-over-year basis
  • The Yen cuts an uncertain path ahead of BoJ policy decision

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The Yen registered a mild move against the US Dollar as a set of important Japanese economic data crossed the wires. The jobless rate for September matched market expectations and the prior reading with a print of 3.4 percent. The job-to-applicant ratio for the same period inched slightly higher to 1.24 from its last previous reading of 1.23. Overall household spending offered the biggest surprise contracting -0.4 percent in September in contrast to August’s 2.9 percent growth and the markets’ forecast of 1.1 percent expansion. This was the sharpest drop since June.

Shaping monetary policy expectations that were already rumbling ahead of the BoJ policy gathering, inflation statistics met expectations by keeping anchored at 0.0 percent September. This was a decline from the already tepid 0.2 percent pace the previous month. Core CPI offered the only glimmer of actual inflation pressure among the gauges by reaching its highest level since April. The barometer printed 0.9 percent, beating the 0.8 percent previous reading.

The restrained reaction from the local currency and capital markets may be due to anticipation of the BoJ’s impending rate decision. Traders eagerly await clarity from the central bank on whether it will further its stimulus to prop-up inflation which has failed to meet the 2 percent target. The announcement will be released at some point early in Friday’s early Tokyo session. A Bank of Japan vote to maintain its current ¥80 trillion yen-per-year annual stimulus program may lead the Yen to advance as considerable depreciation over the past three years has resulted from the central bank’s steps towards accommodation. On the contrary, a further increase in the monetary base would likely to lead to depreciation of the unit (a rally in Yen crosses) and may offer a boost to risk-sensitive assets and currencies.

Japan's Set of Data

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