USD/JPY is on the move upwards in Friday trading. The pair is trading in the mid-99 range in the European session. On Wednesday, the dollar tumbled after the minutes from the most recent Federal Reserve policy meeting indicated that policymakers were split on scaling back QE. In economic news, US Unemployment Claims disappointed, coming in way above expectations. In Japan, there were no surprised from the BOJ, which made no changes to its current monetary policy. Revised Industrial Production looked sharp, posting a gain of 1.9%. On Friday, the US releases two key events – PPI and UoM Consumer Confidence.
At the end of a policy meeting on Thursday, the Bank of Japan sounded cautiously optimistic about the economy, and reiterated that it would use quantitative and qualitative monetary easing to achieve an inflation level of 2% .The BOJ did not adjust its aggressive monetary policy, which it started back in April. At that time, the BOJ said it planned to pump JPY 130 trillion into the economy within two years, and committed to doubling the monetary base to JPY 270 trillion by the end of 2014. These measures have sent the yen tumbling to multi-year lows, but the economy has been slow to respond to the monetary shock therapy. Lately, however, economic indicators have shown improvement, including inflation indicators, which have pointed upwards.
This week’s Japanese releases have been positive, for the most part. Tertiary Industry Activity climbed to 1.2%, its best performance since February. The estimate stood at 0.9%. There was more good news from the Corporate Goods Price Index, which jumped from 0.6% to 1.2%, matching the forecast. This is the inflation index’s sharpest rise since January 2012, and points to inflation in the economy. One of the foremost aims of the country’s monetary policy has been to stamp out deflation, so the CGPI reading is certainly welcome news. The Consumer Confidence release was not as sharp, falling from 45.7 points to 45.3, well off the estimate of 44.3. There was more good news on Wednesday, as Core Machinery Orders, an important manufacturing release, jumped 10.5% in June, crushing the estimate of 1.9%.
