Japanese Macroeconomic Data Positive, Yen Erases Rally

The Japanese yen was rising intraday on the persisting concerns about the US-China trade talks. But currently, the yen has fallen against all other most-traded rivals. Domestic macroeconomic data could not be blamed for the fall as today’s report was rather good.
Japan’s Ministry of Economy, Trade, and Industry reported that the All Industry Activity Index rose by 1.5% in September after showing no change in August. The reading matched analysts’ forecasts exactly.
Meanwhile, traders continued to worry about how long it will take the United States and China to reach the “phase-one” trade agreement. Beyond disagreement on several key issues in the deal, Hong Kong remains the major sticking point souring relations between the world’s two top economies. Both Senate and House passed the Hong Kong Human Rights and Democracy Act, and now US President Donald Trump should sign it. China condemned the USA for interference in what it considers its internal affairs. The news made speculators question whether the deal can be reached before new US tariffs will kick in on December 15. Now many analysts argue that the agreement will not be reached this year at all. And such a view seriously hurt the optimism of traders and their desire to risk.
Going forward, the yen will be affected by developments in the Sino-US relations and to a smaller degree by macroeconomic data. Tomorrow, Japan’s inflation data will come out. Experts predicted it to show an annual rate of 0.4% in October after the 0.3% rate in September. Markit will also release its flash manufacturing Purchasing Managers’ Index for November, which is expected to show a small increase from 48.4 to 48.7.
USD/JPY traded at 108.61 as of 11:37 GMT today after opening at 108.59 and falling to the daily low of 108.28. EUR/JPY gained from 120.21 to 120.38 after falling to the session minimum of 119.94. GBP/JPY opened at 140.31, fell to the daily low of 139.97, but rebounded to 140.55 later.

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