A slew of good Japanese data pushed the US dollar lower against the yen, as indications of an improving Japanese economy continue to arrive.
November industrial production rose 5.8% year-on-year, higher than the 4.3% increase seen in October, while capacity utilisation moved into positive territory, with the Ministry of Economy, Trade and Industry’s index rising to 1.6 from -2.3. The opening of US markets this afternoon, and the release of further US economic data, will be important for the upcoming direction of USD/JPY. The Empire manufacturing index, released at 1.30pm (London time) is expected to show an improvement in January, rising from 10.57 to 13, a sign that manufacturing in and around New York is gaining strength. Also out, at 10pm (London time), is the ABC consumer confidence index, and if this measure also improves then investors can expect the US dollar to regain some of its poise against the yen. That being said, Japanese finance officials will also be hoping that their eurozone counterparts can construct a sensible solution to the region’s sovereign debt crisis, as any increase in worries about Europe could see investors move back towards the yen to seek shelter from the turmoil in Europe.