"Weaker Japanese data suggests we're likely to get more policy action and that will put the yen under pressure"
- Ian Stannard, head of European foreign-exchange strategy at Morgan Stanley
The Japanese Yen oscillated around the triple-digit territory on Friday, as investors weighed the testimony hearing of Janet Yellen and weaker-than-expected growth added to concerns the BoJ may add more stimulus soon. The Yen plunged versus all other major currencies, falling versus the Dollar, Euro and Pound, 0.25%, 0.33% and 0.27%, respectively. Japanese economy slowed to 1.9% in the third quarter, down from 3.8% in the prior quarter, and on the back of disappointing data Finance Minister Taro Aso stressed out the importance of central bank's interventions.
Economic growth slowed; however, it has done little to change central bank's optimistic economic outlook, and reinforced a view more bad signs would be required before Kuroda pulls the trigger once again. Bank of Japan officials claimed that these figures are normal after a period of strong growth, having little impact on their assessment of the economic recovery. The latest data confirms economic dependency on public demand that rose 6.5%, supported by a 28.7% jump in public investment. While the government and central bank officials do not see any surprises in the recent reports, the growing tensions between policymakers are suggesting they are not sure over whether the BoJ would be able to meet its 2% inflation target within two years. In case Kuroda expresses any doubts over the goal, it would bolster the chances of additional stimulus measures.
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