During the Asian session on Monday, the USD/JPY pair edged lower, nearing the 150.00 mark following a session marked by volatility. The Japanese Yen (JPY) received a boost from positive Machinery Orders data from Japan, although gains made after the release of better-than-expected US Producer Price Index (PPI) data on Friday were tempered by dovish remarks from James Bullard, the former president of the St. Louis Federal Reserve.
Japan’s Machinery Orders for January displayed a notable improvement, rising by 2.7% month-on-month, surpassing the expected 2.5% and recovering from the previous decline of 4.9%. The year-on-year figures also showed improvement, reaching -0.7%, exceeding the anticipated -1.4% and reversing the previous decline of -5.0%. These figures point to increased confidence in Japan’s manufacturing sector.
Over the weekend, Japanese Finance Minister Shunichi Suzuki commented in an interview, stating, “The Bank of Japan (BoJ) holds jurisdiction over monetary policy. But there will be a phase when interest rates go up.”
Contrastingly, former Federal Reserve official James Bullard, speaking at the National Association for Business Economics (NABE) conference, suggested a potential reduction in interest rates at the March meeting to prevent economic activity from being stifled by higher rates.
The US Producer Price Index (PPI) for January showed a year-over-year growth of 0.9%, exceeding the expected 0.6% and the previous 1.0%. The monthly improvement was 0.3%, contrasting the previous decline of 0.1%. However, the preliminary Michigan Consumer Sentiment Index rose to 79.6 from the prior 79.0, falling short of the anticipated reading of 80.0.
In January, the US Core Producer Price Index (YoY) increased by 2.0%, surpassing the expected 1.6% and the previous 1.7%. On a month-on-month basis, the data indicated a 0.5% rise, compared to the anticipated 0.1% improvement from the prior decline of 0.1%. With US banks closed for the President’s Day bank holiday, minimal movement in the US Dollar is anticipated.
