Unemployment in Japan dropped to a 20-year low today as the unemployment rate fell from 3.4% in September to 3.1% in October. But it was a mixed picture for inflation as overall CPI rose but core CPI remained negative. National CPI increased to 0.3% y/y in October from 0.0% the prior month. However, CPI excluding food and energy, disappointed and fell to 0.7% and was below estimates of 0.8%.
Also out today was household spending figures, which declined for the second month in-a-row and by a bigger-than-expected 2.4% y/y. The mixed data suggests the Bank of Japan is likely to keep monetary policy on hold for now while it waits to see whether the fall in unemployment will eventually drive consumers to spend more.
The yen firmed against other currencies after the data, rising to 122.35 yen per dollar in late Asian trading. A decision by Japan’s government to increase spending to stimulate the economy also supported the yen.
The US dollar was mostly flat on Thursday but drifted lower in today’s Asian session on thin post-Thanksgiving trading. The euro rose on the dollar weakness, climbing to 1.0628 dollars in late Asian trading. But the pound fell against the greenback on weak consumer confidence survey data. Cable fell to 1.5080 having briefly topped 1.51 earlier in the session.
Crude oil prices were heading into negative territory for a second day on Friday despite some geopolitical tensions in the Middle East. Investors were also cautious about whether next week’s OPEC meeting would result in a decision to cut production. Data showing that profits of industrial companies in China fell in October also hurt sentiment. US oil futures were down at $42.24 in late Asian trading.
The rest of the day is set to be relatively quiet again due to half-day trading in the United States and the absence of any major data from the Eurozone. The only data of interest will be the second estimate of UK GDP data for the third quarter, which is expected to remain unrevised at 0.5% q/q.
Risk Warning: Forex, Commodities, Options and CFDs (OTC Trading) are leveraged products that carry a substantial risk of loss up to your invested capital and may not be suitable for everyone. Please ensure that you fully understand the risks involved and do not invest money you cannot afford to lose. Please refer to our full Risk Disclosure.