"The yen fell amid the view good economic data will push up U.S. yields. It's tricky to judge which way Japanese stocks will go and that's why they were fluctuating."
-Masaru Hamasaki, a senior strategist at Tokyo-based Sumitomo Mitsui Asset Management Co.
The Japanese Yen plunged to the lowest level in more than five years against the greenback as U.S. politicians passed the 2014 budget, avoiding another government shutdown. Even a stronger-than-expected industrial production posted by the Japanese government was unable to curb pair's appreciation. On Friday the Ministry of Economy, Trade and Industry has revised up October's industrial production, marking a second consecutive month of gains and underscoring the ongoing recovery in the world's third largest economy. The output rose 1.0% over the period, compared with an initial reading of a 0.5% hike and following a 1.3% gain in September. Moreover, the capacity utilisation index climbed 1.2% over the corresponding period, hitting 99.6.
Stronger-than-expected data are decreasing pressure on the government as earlier in December figures showed the economy expanded less than expected, while consumer confidence improved less than expected. Positive data is raising hopes that the central bank will not be forced to inject more liquidity into markets, while some analysts believe another adjustment to the BoJ's monetary policy will be made in spring. Nonetheless, markets and specially USD/JPY will be mostly driven by growing concerns over December tapering from the Fed, which will put at least 105 mark on the map.
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