Japanese yen strengthens as the US dollar falls ahead of retail sales statistics.
Japanese yen (JPY) gains ground versus the US dollar (USD), snapping a four-day winning streak on Friday.
Japan’s GDP annualized growth rate for the third quarter was 0.9%, down from 2.2% in the second quarter.
The JPY struggled with the announcement of Japan’s Q3 Gross Domestic Product (GDP) figures on Friday. The strength of the US Dollar (USD) helped to strengthen the USD/JPY pair’s upside potential. Traders are also getting ready for the release of The US Retail Sales report for October is due later on Friday.
Japan’s preliminary Gross Domestic Product (GDP) increased by 0.2% quarter on quarter in the third quarter, down from 0.5% the previous quarter, in line with market estimates. The country’s annualized GDP growth in Q3 was 0.9%, above the market forecast of 0.7% but representing a significant drop from the 2.2% increase reported in Q2.
Japan’s Kato said he will take appropriate action to curb excessive volatility in foreign exchange rates.
Katsunobu Kato, Japan’s Finance Minister, said on Friday that he will take appropriate action to address excessive volatility in foreign exchange (FX) rates. Kato stressed the need of stable FX fluctuations that reflect economic fundamentals, while also expressing alarm about one-sided, abrupt market moves.
Meanwhile, Japan’s Economy Minister, Ryosei Akazawa, indicated that he expects a small economic recovery to continue, driven by gains in employment and salaries. However, Akazawa stressed the importance of closely monitoring potential downside threats from global economies, as well as volatility in financial and capital markets.
Daily Market update:Japanese yen continues under pressure amid a decline in domestic economic activity.
The US Dollar Index (DXY), which analyzes the US dollar’s performance versus six major currencies, is trading around 106.70, down from its yearly high of 107.06 set on Thursday. This dip may be related to a pause in “Trump trades.”
On Thursday, Fed Chair Jerome Powell stated that the US economy’s recent performance has been “remarkably good,” giving the Fed flexibility to gradually cut interest rates. Meanwhile, Richmond Fed President Thomas Barkin remarked that while the Fed has achieved significant progress thus far, there is still more Work needs to be done to keep the momentum flowing.
The US Producer Price Index (PPI) increased 2.4% year on year in October, up from a revised 1.9% increase in September (originally 1.8%) and exceeding market estimates of 2.3%. Meanwhile, the Core PPI, which excludes food and energy, increased 3.1% YoY, slightly more than the expected 3.0%.
Shinichi Uchida, Deputy Governor of the Bank of Japan, emphasized on Thursday the need of financial institutions and regulators being prepared for rapid deposit outflows caused by digitalization and technology improvements. Uchida also stated that the relationship between non-bank financial institutions and the banking sector has increased, and any deterioration in the non-bank sector could spread across the financial system via market channels.
Japan’s Producer Price Index (PPI) grew by 3.4% year on year in October, reaching the anticipated 3.0% and preceding 3.1% levels. Meanwhile, the PPI increased by 0.2% month on month, exceeding the expected flat growth for the month.
BoJ’s Summary of Opinions from its October meeting revealed disagreement among policymakers over additional rate hikes.
The BoJ’s Summary of Opinions from its October meeting revealed disagreement among policymakers over additional rate hikes. Nonetheless, the central bank maintained its outlook, indicating that it might raise its benchmark rate to 1% by the second half of fiscal 2025, representing a 75 basis point policy tightening from the current rate.
The US Consumer Price Index (CPI) increased by 2.6% year on year in October, as expected. Meanwhile, the core CPI, which includes the more volatile food and energy components, increased by 3.3%, matching market expectations.
