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Yen Remains Soft As BOJ Minutes Revealed Some Concerns On Growth

ByActionForex
Published 12/26/2013, 02:09 AM
Updated 03/09/2019, 08:30 AM

The yen remains soft in tight range against other major currencies. Meanwhile, markets are generally quiet in holiday trading today. The BoJ released minutes of the November 20-21 meeting. A point to note is that two members expressed some concerns over slowdown in GDP growth in Q3. One member worried that the reduction in growth rate was not temporary but "could represent a downward shift in the trend." Meanwhile, another member showed concern on the large contribution from inventories and fall in wages. Nonetheless, many members were optimistic that the GDP data "continued to show positive movements, particularly domestic demand".

It should, however, be noted that the meeting was held after release of the first estimate of Q3 GDP on November 13, which showed 1.9% annualized growth, half of Q2's 3.8% annualized. The revised data released on December 8 has indeed to showed even worse figure of 1.1% annualized. The revision might have triggered some adjustment in board members view.

Also, the Japanese government is set to raise sales tax from 5% to 8% in April. There has been speculations that the BoJ would launch another round of massive easing around that time to counter the impact of the sales tax hike. And there have been speculations that BoJ would have to do that also to help meet its 2% inflation target in time. Such expectations would continue to pressure the yen in near term.

On the data front, Japanese housing starts rose 14.1% yoy in November, better than expectation of 9.5% yoy. Most European markets are still on holiday today. US will release jobless claims.

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