The Japanese Yen (JPY) regained some ground against the US Dollar (USD) on Wednesday as Manufacturing and Construction data came in below economist expectations.
Early in the session, the Japanese Yen was weakened by a report released in the Asian session, which showed that Japan’s economy is facing a mixed outlook. The Bank of Japan’s quarterly Tankan business survey for last month showed that higher costs are having a negative effect on household spending.
The Tankan report showed that sentiment among the Asian nations manufacturers increased to 13 in September, up from the 12 figure recorded in the preceding month. The report suggested that the negative impacts of weaker exports were offset by the weakening of the Yen. The report added to expectations that the Japanese Central Bank will choose to leave its quantitative easing programme unchanged at its next policy meeting on October 6.
After the release of the report, the Japanese Yen slipped beyond the 110 per Dollar level for the first time since 2008. The currency then regained some ground after economists said that they expect the Yen’s run of declines will slow over the coming weeks as they deem its recent run of losses as overdone.
‘The Yen has fallen about 6 Yen in September alone and should it sustain the current pace of depreciation, it would break 145 by the end of March, which would be absurd. There are signs of speeding,’ Daisaku Ueno, chief currency strategist at Mitsubishi UFJ Morgan Stanley.
As the session progressed the Yen inched higher against the US Dollar after, the US currency was softened by the release of softer than expected manufacturing PMI data.
The ‘Greenback’ softened against a basket of currencies after data showed that manufacturing activity expanded at its slowest pace in three months in September.
According to the Institute for Supply Management, its PMI declined to a figure of 56.6 in September from August’s figure of 59.0. Economists had been expecting a figure of 58.5.
Further losses for the ‘Greenback’ were limited however, as the latest ADP employment data showed that the USA’s private sector created 213,000 jobs last month, beating expectations for a figure of 210,000 and added to Augusts number of 202,000.
The Japanese Yen also regained ground against the Pound (GBP) after manufacturing PMI data out of the UK came in softer than expected at a 17-month low.
