The Bank of Japan was about flat against major rivals and fell versus commodity currencies today. Better-then-expected domestic manufacturing data was unable to help the currency. Now, traders wait for minutes of the latest monetary policy meeting of the nation’s central bank.
The headline au Jibun Bank Japan Manufacturing Purchasing Managers’ Index rose to 48.7 in October from 47.7 in September according to the final estimate. The actual reading beat market expectations and the preliminary figure of 48.0. The report commented on the result:
The latest PMI data pointed to a further move towards more stable operating conditions across the Japanese manufacturing sector in October. Panel members reported further, albeit softer, falls in output and new orders, with companies continuing to report an overall negative impact of the coronavirus disease 2019 (COVID-19) pandemic on production and client demand. Meanwhile foreign demand for Japanese goods rose for the first time in close to two years as external markets gradually recovered. Firms in the manufacturing sector were increasingly optimistic of a rise in output over the coming year, as many expected the pandemic to end and to return to pre-crisis demand conditions.
The Bank of Japan will release minutes of its September meeting on Wednesday. While Japanese policymakers kept interest rates and the size of the asset-purchase program unchanged, it is possible that the tone of comments will be more dovish due to the global developments in the COVID-19 pandemic. If that is the case, the yen can move lower.
Japanese markets will be closed tomorrow for a holiday.
USD/JPY jumped from 104.49 to 104.84 as of 19:20 GMT today. EUR/JPY opened at 121.70, below the Friday’s close of 121.90, rallied to the session high of 122.15 intraday but has retreated to the opening level by now. CAD/JPY surged from 78.41 to 79.15.
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