Yen Remains Weak Despite Solid Consumer Spending Data

The Forex market remains relatively quiet as most of the traders are away on holidays. The statistical agencies in the Europe are closed as well. So, there are no economic releases during the past two days. However, the Japanese institutions are back to work and a series of positive economic data was reported yesterday. That includes an upbeat consumer spending and inflation data.

The Statistics Bureau reported a 1.7% y-o-y rise in consumer spending in November, exceeding analysts’ estimates of a 0.6% growth. The consumer spending remained unchanged in the same period last year. Japan’s economy grew at an annualized rate of 2.5% in the third quarter of 2017. The seventh successive quarter of growth was achieved mainly due to robust exports and capital expenditure.

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Separate data released on Tuesday showed the unemployment rate hit a 24-year low of 2.7% in November, while job availability reached a near 44-year high. Economists had expected an unemployment rate of 2.8%. Statistics Bureau also reported a 0.9% y-o-y increase in the nationwide Core Consumer Prices in November, versus analysts expectation of a 0.8% growth. In the earlier month, the consumer price index grew 0.8% on an annualized basis.

In Tokyo, Core Consumer Prices increased 0.8% in December, faster than analysts expectation of a 0.7% growth. In November, Core Consumer Price index rose 0.6%.

Despite the solid data, the yen has hardly gained against its rivals. The reason is the poor inflation rate, which is far away from the Bank of Japan’s target of 2%. The weak inflationary pressure indicates that the Bank of Japan is unlikely to change its monetary policy soon and would continue with the current quantitative easing program. That keeps the yen weak against the rivals.

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