The yen weakened for a second day against the dollar after another run of weak Japanese data. An unexpected plunge in new machinery orders from Japanese companies raised concerns about Japanese businesses’ appetite for investment. Orders rose less-than-expected by 8.8%, well below the 15.3% gain forecasted.
The weak data increases speculation that the Bank of Japan might have to provide additional stimulus, which would not be helpful for the yen.
The dollar inched up to a high of 102.64 yen, the highest in over a week. The dollar has bounced back after hitting a 2-week low of 101.50 yen late last week.
Sterling set a fresh 4-month low of 1.6668 today, remaining under pressure after the Bank of England surprised markets yesterday with a dovish UK economic report and signaled that an interest rate hike could be delayed.
The euro opened in Asia today at 1.3362 after reversing all gains made against the dollar from yesterday’s high of 1.3414. The single currency came under pressure again today and has scope to fall towards a 9-month low of 1.3335 touched last week if Eurozone gross domestic product (GDP) data due later in the day were to disappoint. Eurozone inflation data due later are also a key risk for the euro. Meanwhile German and French GDP data so far this morning have disappointed.
Eurozone industrial production yesterday showed a surprise contraction in June, raising speculation for more stimulus from the European Central Bank.