In Japan, the Prime Minister earlier today spoke of the many disadvantages of a weak Japanese Yen, including burdens to Japan’s consumers, small businesses and especially exporters. To investors, Shinzo Abe’s speech to the Japanese Parliament spoke volumes, suggesting that the government and the Bank of Japan might be on the same page and that further deliberate weakening of the Japanese Yen was unlikely. Indeed, Haruhiko Kuroda, the BOJ governor, recently said that provided that the central bank’s goal of 2% inflation was met by the mid-point of next year, there would be no further need to tweak monetary policy.
As a result of the combined testimony of both Abe and Kuroda, the Japanese Yen was broadly higher as profit taking ensured on short Yen crosses. As reported at 4:04 a.m. (EDT) in New York, the USD/JPY traded at 108.45 Yen, a decline of 0.3% from the session peak of 109.25 Yen and far off last Wednesday’s high of 110.09 Yen. The EUR/JPY was also trading lower at 137.10 Yen, dropping 0.4% from the session low of 136.875 Yen.
German Industrial Output Dismal
In Germany, data showed a month-over-month decline in industrial output in August, the largest single month’s decline in more than 5½ years. According to Germany’s statistics bureau, output fell to -4% from July’s 1.6% (which itself was revised downward); analysts polled had forecast a drop to -1.5%. That weighed heavily on the Euro, which fell against the greenback to $1.265, erasing some of Monday’s gains.