Japanese Yen Mixed on Trade, Inflation As Business Leaders Pessimistic

The Japanese yen is finishing the trading week mixed against several major currencies as trade and inflation data were in focus among investors. With new polls suggesting that the nation’s business leaders are bearish on the world’s third-largest economies, it is anyone’s guess as to whether Japan enters a recession or not. But the numbers are not pleasing to investors.

According to the Ministry of Finance, the country’s trade deficit narrowed to $1.27 billion in August as exports and imports slumped.
Last month, Japanese exports tumbled to a seven-month low of 8.2% year-on-year to $517 billion. It was driven by declines in transport equipment, machinery, manufactured goods, and chemicals. Imports slumped 12% YoY to $583 billion, led by decreases in liquid natural gas (LNG), petroleum, coal, and machinery.
Consumer prices rose 0.5% last month, down from the 0.6% increase in July. This was the lowest rate in two years. If food and energy are excluded, then inflation climbed by 0.6%.
In the week ending September 14, stock investments held by foreigners fell by $51.2 billion and bond investments held by Japanese abroad by $9 billion.
Next on the schedule will be the manufacturing, services, and composite purchasing managers’ index (PMI) on Monday.
A new Nikkei third-quarter poll found that 41.3% of Japanese corporate executives believe the global economy is cooling down, signaling the worst outlook since 2012. This is up 13.5% from the second quarter. The same survey found that more than one-third (36.6%) of business anticipate the global economy to worsen in the next six months, up 6% from the previous study.
One day before the Federal Reserve cut interest rates by a quarter-point, the Bank of Japan (BOJ) left rates unchanged at -0.1% at its September meeting. The BOJ also left the 10-year government bond yield at around 0%. Policymakers said they would review economic and monetary policy, as well as industry developments and prices, at the next meeting. This is likely because the BOJ did not want to act without knowing what the US central bank was doing.
The USD/JPY currency pair slipped 0.26% to 107.73, from an opening of 108.02, at 17:41 GMT on Friday. The EUR/JPY plunged 0.5% to 118.65, from an opening of 119.30.

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