Japanese Yen Plunges on String of Bearish Data

The Japanese yen is in freefall against many of its currency rivals at the end of the trading week, driven by bearish data that signal the world’s third-largest economy might be nearing a recession after all. There was hope, however, on revised figures that show Japan’s economy grew faster than initially thought in the third quarter.

According to newly revised Cabinet Office data, the gross domestic product (GDP) advanced at an annualized pace of 1.8% in the July-to-September period, greater than the first reading of 0.2%. This is also stronger than the median estimates of 0.6% expansion.
But that was probably the only piece of good news for Japan this week.
November machine tool orders cratered 37.9%, down from the 37.4% decline in October. Machinery orders fell 6% in October, down from the 2.9% decrease in September. Industrial production slipped 4.5% in October after an admirable 1.7% jump in September. Capacity utilization also contracted 4.5% in October following a 1% increase in the previous month.
Some of the indexes were mixed. The Tankan large manufacturers index was flat, the large all industry capex surged 6.8%, and the small manufacturers’ index clocked in at -9.
Also, the Bank of Japan (BoJ) released its closely watched survey of businesses and it found that the mood among companies is at its lowest level in seven years. The business community is bearish on the lingering US-China trade dispute and soft global demand that is weighing on its export-dependent economy.
Next on the data front will be the purchasing managers’ index (PMI) for manufacturing and services and the latest trade numbers, which are expected to be disappointing.
The federal government recently announced that it would be unleashing a $120 billion stimulus package to bolster the national economy. With consumer spending looking to be minimal in the aftermath of the sales tax hike, the government is trying to find ways to offset the decline.
The USD/JPY currency pair rose 0.27% to 109.59, from an opening of 109.31, at 12:43 GMT on Friday. The EUR/JPY surged 0.58% to 122.38, from an opening of 121.61.

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