Yen Down on Weak Jibun Bank Manufacturing PMI Data

Yen Down on Weak Jibun Bank Manufacturing PMI Data
February 4, 2020


The greenback gained ground against the yen yesterday after Japan’s Jibun Bank Manufacturing PMI data for January missed analysts’ estimates. The USD/JPY pair’s uptrend gained further momentum after the Institute for Supply Management (ISM) reported an upbeat manufacturing PMI (purchasing managers index) for January. In the past 24 hours, the USD/JPY pair rose from a low of 108.30 to a high of 108.80.

Japan’s Jibun Bank reported manufacturing PMI (Purchasing Manager’s Index) reading of 48.8 in January, compared with 48.4 in the earlier month. Economists had anticipated a reading of 49.30.

The January figures reflect further worsening of the business environment encountered by Japanese goods manufacturers. Since May 2019, the headline index has been recording a reading below 50, indicating contraction. The average reading for the period of May to January is 49.0.

The sub-sector data revealed that the manufacturing PMI reading was negatively impacted by the capital goods segment. Export orders declined in January, even though the rate of decrease eased considerably.

In the US, the Institute for Supply Management (ISM) reported January PMI reading of 50.90 and an increase of 3 points from the seasonally adjusted December reading of 47.8.

New Orders Index reading was 52 in January, up 4.4 points from the December reading of 47.6. The Production Index reading was 54.3 in January, an increase of 9.5 points from 44.8 in the earlier month. The Backlog Index rose 2.4 points to 45.7. Likewise, the Employment Index recorded a 1.4 point increase to 46.6. While the new export orders index rose 6 points to 53.30, the import index posted 2.5 points increase to 51.3.

Manufacturing prices index rose to 53.3 in January, from 51.7 in the earlier month. Economists had anticipated a reading of 52.

Timothy Fiore, Chair of the Institute for Supply Management, opined that the overall sentiment for the near-term remains bullish. “Global trade remains a cross-industry issue, but many respondents were positive for the first time in several months. Among the six big industry sectors, Food, Beverage & Tobacco Products remains the strongest, followed closely by Computer & Electronic Products. Petroleum & Coal Products is the weakest. Overall, sentiment this month is moderately positive regarding near-term growth.”  

The weak Japanese data is anticipated to keep the yen in a downtrend against the greenback in the days ahead.

The historical price chart indicates that the USD/JPY pair has bounced off the support at 108.40. The next major resistance is anticipated near 109.15. Additionally, the stochastic oscillator is rising out of the bearish zone. Therefore, we expect the currency pair to remain in an uptrend in the days to come.

JPY - technical analysis - 4th Feb 2020

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Janine is our editor for related stock market news. Andrew and Janine will be focusing on providing the latest trends and where the next hit could be

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