25 Oct 2013
USD/JPY: improving Japanese inflation number drives gains
FXstreet.com (London) -The yen has slid this morning with Japanese core inflation numbers suggesting that Abenomics is beginning to see some traction in the economy as it fights inflation.
The core consumer price index (CPI) climbed 0.7 percent on year in September.
USD/JPY has steadily climbed from as session low of JPY96.9350 to 97.3335. However, the dollar resurgence against the yen could have been much stronger had it not been for Fed taper and shutdown concerns weighing on the dollar. In comparison, the Nikkei has slumped 2.75 percent.
The dollar has been under pressure thanks to lacklustre US labour market data solidifying expectations that any tapering of the Federal Reserve’s USD85bn-a-month asset purchase programme would be pushed into 2014, after the 7 February debt ceiling deadline and after Ben Bernanke end his term as Fed chairman. The prospect of this ultra-loose monetary policy combined with the effects of this month’s government shutdown has weighed on the dollar.
The US government shutdown and subsequent flight to the perceived safety of the yen will have caused headaches for Japanese monetary authorities. Although on record the Bank of Japan chairman, Haruhiro Kuroda has stated that the central bank will not target yen weakness directly, instead focussing on a 2 percent inflation target, he has previously joined in with long-running Japanese concern that a strong yen is damaging Japan’s exporting economy, damaging competitiveness abroad at the same time as the country struggles with sluggish domestic consumption.
The core consumer price index (CPI) climbed 0.7 percent on year in September.
USD/JPY has steadily climbed from as session low of JPY96.9350 to 97.3335. However, the dollar resurgence against the yen could have been much stronger had it not been for Fed taper and shutdown concerns weighing on the dollar. In comparison, the Nikkei has slumped 2.75 percent.
The dollar has been under pressure thanks to lacklustre US labour market data solidifying expectations that any tapering of the Federal Reserve’s USD85bn-a-month asset purchase programme would be pushed into 2014, after the 7 February debt ceiling deadline and after Ben Bernanke end his term as Fed chairman. The prospect of this ultra-loose monetary policy combined with the effects of this month’s government shutdown has weighed on the dollar.
The US government shutdown and subsequent flight to the perceived safety of the yen will have caused headaches for Japanese monetary authorities. Although on record the Bank of Japan chairman, Haruhiro Kuroda has stated that the central bank will not target yen weakness directly, instead focussing on a 2 percent inflation target, he has previously joined in with long-running Japanese concern that a strong yen is damaging Japan’s exporting economy, damaging competitiveness abroad at the same time as the country struggles with sluggish domestic consumption.