The Japanese Yen weakened against the Pound and fell to a fresh two-month low against the US Dollar following the release of weaker than forecast economic data and as Japan’s Finance Minister said that Japan must keep open the option to intervene in the currency markets.
According to Tokyo based Cabinet Office, Japan’s GDP growth rate slowed in the third quarter of the year to 1.9%, down from the 3.8% growth seen in the second. The figure was better-than-expected as economists had forecasted a slowdown to 1.7%.
“There are both positive and negatives to the GDP figures. On the one hand, it shows that Abenomics is steadily moving forward. However, even though the Yen has corrected ad has been weakening over the past nine months, capital investment is still weak. But I think the slowdown in GDP growth will be temporary,” said Akio Yoshino, chief economist at Amundi Japan Ltd.
Other data however came in below expectations including the latest Industrial Production report which showed that output fell from 5.4% to 5.1% on an annual basis.
The biggest drag on the Yen however were comments made by Japanese Finance Minister Taro Aso. Mr Aso said that it was important for the country to have currency market intervention as a policy option.
The Pound is likely to soften throughout the day after retail sales data came in below forecasts.
The Euro is likely to see a bout of weakening as GDP data is expected to show that the single currency region’s economy contracted in the third quarter of the year.
As the afternoon approaches investor attention will focus more and more on the US jobless claims data for any indication as to when the Federal Reserve may choose to taper its monetary easing programme. A positive report makes an earlier cut more likely which will benefit the US Dollar.
Current Japanese Yen (JPY) Exchange Rates:
The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 99.8524
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 160.1143
The Euro/Japanese Yen Exchange Rate is currently in the region of: 134.3508
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 82.5356
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 92.9896
(Correct as of 09:45 am GMT)