Japanese Yen Unmoved By Fall In Capital Spending

By Lujia Lin,

THE TAKEAWAY:Japanese capital spending plunges YoY, but manufacturing investmentrises on the quarter > Economic picture remains mixed,intervention still on the table > Yenflat

Chart generated using Strategy Trader

The Japanese Yen traded largely flat in spite of data indicating a much larger than expected plunge in capital spending. Immediately following the report, the currency remained within a tight range near 77.75 versus the US Dollar.

According to the Ministry of Finance report,total capital spending in 3Q 2011 dropped 9.8 percent from the sameperiod last year, confounding expectations of a 3.6 percent fall.The decline is even more severe than that registered in the2 nd quarter immediately following the earthquake,in which capital expenditures fell 7.8 YoY. On a QoQ basis, totalcapital spending fell 2.7 percent, slightly better than the2 nd quarter’s -6.6 percent print.Manufacturing investment QoQ swung to positive, rising by 3percent.

With economic data continuing to present a very uncertain outlook for the Japanese economy – with the jobless rate rising to a 3-month high in October despite better-than-expected October retail sales and industrial production – markets will continue to focus on possible intervention from policymakers. Partially reflecting concerns about the strong Yen, Prime Minister Yoshihiko Noda on Thursday ordered a fourth emergency reconstruction budget that is expected to top 2 trillion Yen, in addition to the 18 trillion Yen already disbursed in the previous spending packages. Speculation about whether these concerns will translate into further currency-market intervention following the most recent Oct. 31 action will continue to keep Yen traders on edge.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2011/12/02/Japanese_Yen_Unmoved_by_Fall_in_Capital_Spending.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

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