The Japanese Yen remains depressed against its American counterpart during Asian trading, with the USDJPY pair eyeing this week’s swing high ahead of the release of the FOMC meeting minutes later Wednesday.
In the meantime, diminishing odds for more rate hikes by the Bank of Japan, especially after data released on Tuesday showed that Japan’s real wages fell in August after two months of gains, keeps JPY bulls on the defensive.
According to the government data released on Tuesday, real wages in Japan – the world’s fourth-largest economy – fell 0.6% and household spending declined by 1.9% in August from the same month a year earlier.
This, along with comments from Japan’s Prime Minister Shigeru Ishiba, saying that the country is not in an environment for more rate increases, could derail the Bank of Japan’s rate-hike plans in the coming months.
Furthermore, news of a possible Hezbollah-Israel ceasefire undermined demand for the safe-haven JPY and acts as a tailwind for the USDJPY pair. That said, speculations that Japanese authorities might intervene to support the domestic currency might help limit losses for the JPY amid subdued US Dollar price action.
Japan’s Finance Minister Katsunobu Kato said earlier this week that the government would monitor how rapid currency moves could potentially impact the economy and would take action if necessary.
The Reuters Tankan monthly poll showed on Wednesday that Japanese manufacturers turned more confident about business conditions in October and the sentiment index rose from 4 in September to 7 this month.
The survey, however, indicated that Japanese manufacturers remained wary about the pace of China’s economic recovery and the service sector’s mood eased, reflecting patchy economic conditions in Japan.
Traders might also prefer to wait for this week’s release of the US Consumer Price Index (CPI) and the
The US Dollar extends its consolidative price move near a seven-week top amid diminishing odds for a more aggressive policy easing by the Federal Reserve and does little to influence the USDJPY pair.
Traders now look forward to the release of September FOMC meeting minutes for some impetus, ahead of the US Consumer Price Index and the Producer Price Index on Thursday and Friday, respectively.
(Source: OANDA)
