The safe-haven Yen shed recent gains and broadly softened during the local session as Asian equities rallied, limiting the appeal of lower-risk assets, while less-than-impressive economic news heightened concerns over Japan’s fiscal recovery.
The Japanese Yen exchange rate was in the region of 150.6460 Yen to one British Pound as of 10:00 am GMT
A report showing that Japanese industrial production declined by 3.3 per cent in June month-on-month rather than contracting by the 1.5 per cent expected, heightened speculation surrounding the likelihood of the Bank of Japan expanding its already unprecedented level of stimulus and caused the Yen to weaken against peers including the US Dollar and Pound.
While this slump in industrial production is concerning, according to economist Masaaki Kanno; ‘The fall in production is likely temporary and will be offset by the expected July increase. I don’t think there has been a change in the underlying trend for industrial output.’
The drop in industrial production was the most significant since March 2011.
The GBP/JPY exchange rate hit a low of 149.7920
Separate reports showed an unexpected decline of 0.4 per cent in Japanese household spending (economists foresaw a gain of 1.4 per cent) and a decline in domestic small business confidence from 49.6 in June to 49.4 in July.
In response to the Yen’s downward movement foreign exchange expert David Forrester commented: ‘We have run into pretty important support levels just below 98 [Yen per Dollar] and they’ve held. Technical traders will be thinking that signals a potential bounce in Dollar-Yen short term.’
However, the Yen was able to post a notable advance against a broadly softening Australian Dollar.
Additional movement in the USD/JPY pairing could occur this afternoon in response to US consumer confidence data.
This week’s Bank of England rate decision is likely to be a main driver of GBP/JPY movement.
Current Japanese Yen (JPY) Exchange Rates
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The US Dollar/Japanese Yen Exchange Rate is currently in the region of: 98.1900 >
The Pound Sterling/Japanese Yen Exchange Rate is currently in the region of: 150.6460 >
The Euro/Japanese Yen Exchange Rate is currently in the region of: 130.2730 >
The New Zealand Dollar/Japanese Yen Exchange Rate is currently in the region of: 78.4047 <
The Australian Dollar/Japanese Yen Exchange Rate is currently in the region of: 88.9314 <
(Correct as of 10:00 GMT)
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