USD/JPY Fundamental Daily Forecast – BOJ Kuroda: Not Considering Further Monetary Easing Now

The Dollar/Yen is trading slightly lower on Friday on low post-holiday volume. Traders are closely monitoring U.S. and China relations ahead of a December 15 deadline for a fresh round of U.S. tariffs on Chinese goods. China’s foreign ministry has claimed the U.S. has “sinister intentions” after President Donald Trump signed legislation supporting protesters in Hong Kong.

At 08:19 GMT, the USD/JPY is trading 109.498, -0.013 or -0.01%.

The price action reflects safe-haven buying in reaction to renewed concerns over a trade deal being completed in a timely manner. Investors are trimming positions in global equity markets, while moving money into the safe-haven U.S. Treasurys and Japanese Yen.

Japan Economic News

On Thursday, Japan reported a 7.1% drop in Retail Sales. This followed a 9.2% gain the previous month. Traders were anticipating a decline of 3.8%. Japan’s Retail Sales tumbled at their fastest pace in more than 4-1/2 years in October as a sales tax hike prompted consumers to cut spending, raising a red flag over the strength of domestic demand.

On Friday, Tokyo Core CPI came in at 0.6%, matching expectations. The Unemployment Rate was 2.4%, unchanged. Preliminary Industrial Production fell 4.2%, more than the minus 2.0% estimate. The previous month was revised higher to 1.7%. Japan’s industrial output slipped at the fastest pace since early last year in October, exposing widening cracks in the economy which faces a decline in domestic and foreign demand.

Additionally, Consumer Confidence came in at 38.7, slightly better than the 37.0 forecast and 36.2 previous read. Housing Starts dropped 7.4%. Traders were looking for a reading of -7.5%. The previous read was minus 4.9%.

BOJ’s Kuroda Speaks

Bank of Japan Governor Haruhiko said he was not considering further monetary easing at present, adding he would not hesitate to ease policy further if risks to the Bank of Japan’s 2% inflation target heighten.

The central bank is not at a stage where it needs to consider the timing and method of exit from monetary stimulus either, he told the financial committee of parliament’s lower house.

Kuroda also said on Friday that the central bank would not hesitate to ease policy further if the momentum towards its price stability target is lost as there’s “ample room” for more easing.

Speaking at parliament’s lower house financial committee, Kuroda also said the BOJ would weigh costs and benefits if the central bank were to deploy additional easing steps.

BOJ Governor Haruhiko Kuroda also said the central bank’s ultra-loose policy is aimed at hitting its inflation target, rather than funding government spending, warning against complacency in getting Japan’s fiscal house in order.