Forex - Yen weakens further after BoJ minutes show concern on inflation

Investing.com - The Japanese yen weakened further on Thursday after the release of October board meetings showed concern over the ability to reach a target of 2% sustained inflation in fiscal 2015.

USD/JPY traded at 114.84, up 0.15%, while AUD/USD changed hands at 0.8586, down 0.12%.

The Bank of Japan board discussed the prospect of weaker inflation related to a drop in global crude oil prices and consumer demand at its meeting in October, minutes released Thursday showed,

"However, a few members pointed to a pause in the acceleration in the year-on-year rate of increase in the CPI for all items less food and energy, or the core-core CPI, and commented that this might have been brought about in part by a lack of momentum in private consumption," the minutes said.

"As for the outlook, some members noted that, depending on developments in energy prices, the year-on-year rate of increase in the CPI might temporarily fall below 1%."

On monetary policy, one member said if more investors speculate that aggressive easing will continue for a long time or the BoJ will conduct "extreme" additional easing when the 2% price target is "unlikely to be achieved in about two years," this could lead to economic instability in the medium to long term, such as through a buildup of financial imbalances."

"On this basis, the member continued that it was appropriate to change the expression representing the bank's commitment by stating that the time frame for continuing quantitative and qualitative monetary easing should be restricted to about two years, and that thereafter the bank would review the monetary easing measures in a flexible manner."

In Australia, the October labor force survey showed unemployment at 6.2%, above the 6.1%, expected, but jobs gained by 24,100, compared to an expectation of 10,300.

Overnight, industry data revealing that more private-sector hiring took place last month than investors were expecting gave the dollar a boost over most of its peers on Wednesday.

Payroll processing firm ADP reported earlier that non-farm private employment rose by 230,000 last month, beating expectations for an increase of 220,000.

The economy created 225,000 jobs in September, whose figure was upwardly revised from a previously reported 213,000.

While not always as a reliable predecessor for the government's official jobs report, the latest due out on Friday, Nov. 7, the ADP report does offer guidance on private-sector hiring, and Wednesday's report offset data revealing that service-sector activity in the U.S. grew at its slowest rate in four months in October.

The Institute of Supply Management reported earlier that its non-manufacturing purchasing managers' index fell to 57.1 in October from a 58.6 in September. Analysts had expected the index to inch down to 58.0 in October.

The Non-Manufacturing Business Activity Index decreased to 60.0 from September's 62.9 reading.

The New Orders Index fell to 59.1 from September's 61.0 reading.

The Employment Index increased 1.1 points to 59.6 from the September reading of 58.5 and indicates growth for the eighth consecutive month, which supported the greenback as well.

On the index, a reading above 50.0 indicates the non-manufacturing sector economy is generally expanding, below 50.0 indicates the sector is contracting.

According to the report, 16 non-manufacturing industries reported growth in October.

The euro, meanwhile, held lower as investors awaited the European Central Bank's latest decision on interest rates and monetary policy this Thursday.

The ECB was widely expected to keep monetary policy unchanged, but the Bank of Japan’s surprise stimulus move on Friday fueled expectations that it will soon follow suit in order to spur growth and inflation in the euro area.

The US dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, fell 0.01% at 87.53.