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Yen Steady as Japan Industrial Production Slows in November

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Yen Steady as Japan Industrial Production Slows in November

Industrial output in the world’s third-largest economy slowed in November, according to Japan’s Ministry of Economy, Trade and Industry. The yen remained steady as US markets were closed for Martin Luther King Jr. Day.

Industrial output fell 0.1 percent in November, official data showed today. Economists forecasted a 0.1 percent increase. On an annualized basis, industrial production slowed from 5.4 percent to 4.8 percent. Meanwhile, shipments were unchanged from the previous month. Compared to year-ago levels, shipments rose 6.6 percent. Inventories tumbled 1.2 percent from the previous month and 11 percent on an annualized basis.

The USDJPY pair fell to an intraday low of 103.86. The pair was trading at 104.13 at the end of the European session, a loss of nearly 0.2 percent. The US dollar gained more than 1.2 percent versus the yen last week amid signs of deepening recovery in the United States. Since January 2013 the US dollar has edged up 15 percent versus the yen.

The Bank of Japan devalued the yen last spring after announcing unprecedented easing plans designed to counter decades of deflation. The BOJ has promised to double Japan’s monetary base in less than two years.

Meanwhile, monetary policy is following a different trajectory in the United States, as the Federal Reserve eyes the gradual end of quantitative easing. The Fed could taper asset purchases by another $10-$15 billion at its next policy meetings scheduled for January 28-9. With the US jobs market improving at a steady pace, the attention will shift to the Fed’s 2 percent inflation target. Stubbornly low inflation is believed to be the last hurdle the Fed must clear before closing the books on record stimulus.

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