Weak Inflation Equals to Weak Japan Yen

The Japan yen fought a good fight last week’s Friday, but that doesn’t mean it gained altitude. On the contrary, it, unfortunately, fell against other currencies.

JPY traders didn’t expect that the Japan yen contract will gain despite its fall against other currencies in forex sessions. News from the Japanese consumer inflation rate weighed in on the currency as traders fear the slowing economy.

The AUD JPY pair rose 0.22% or 0.16 points and has reached ranges from ¥74.06 to ¥74.36 last Friday’s trading. And the NZD JPY trading pair also rose 0.28% or 0.19 points and has climbed levels from ¥68.91 to ¥69.29.

Meanwhile, the Japan Yen futures rose 0.55% or 0.000051 points last week.

Traders took time to digest the news about the Japanese core consumer inflation. The negative reading brought the inflation rate to nearly 2 and ½ year lows last September.

The result raised speculations about whether the Bank of Japan will raise its monetary stimulus in its upcoming October 30 and 31 meetings.

What is the BOJ Planning?

The Bank of Japan Governor Haruhiko Kuroda previously said the timing of the global economic recovery is delayed due to the trade war. According to the bank’s leader, the trade wars around the globe keep on weighing in on the Japanese manufacturing sector.

Last Friday, the data about the slowing consumer inflation scared Japan yen traders about another possible stimulus package. The report will play a big factor in the decision-making of the Bank of Japan in its quarterly review of growth and price forecast.

The bank previously issued its forecasts in July this year. BOJ expects a core consumer inflation to hit 1.0% this current fiscal year ending in March 2020.

The Japanese core consumer price index or CPI only rose 0.3% in September from a year earlier. The data went below the forecasts of slowing from a 0.5% gain in August this year.