The Japanese yen climbed against its major rivals in early European deals on Friday, after the Japanese Finance Minister Taro Aso expressed doubts over expanding monetary stimulus to attain the price stability target.
“There’s limit to what monetary policy can do to boost prices,” Aso told reporters after a cabinet meeting.
It is difficult to achieve the BoJ’s price goal with monetary easing alone. “It’s not that there’s no money out there, but there’s no demand therefore prices won’t rise,” he added.
Aso’s comments dampened speculation that the BoJ may add its stimulus at next week’s meeting.
In economic news, the latest survey from Nikkei showed that Japan’s manufacturing sector continued to expand in October, and at a faster pace with a manufacturing PMI score of 52.5.
That crushed expectations for a reading of 50.5, and it’s up sharply from 51.0 in September to reach a year-and-a-half high.
The yen was trading in a negative territory against most major rivals in Asian deals, as dovish comments from the European Central President Mario Draghi on QE underpinned investor sentiment.
Draghi said that policymakers had a “rich discussion” about the instruments that might be used to increase stimulus as global growth concerns weigh on the region’s economic recovery.
The yen firmed to a fresh 2-week high of 123.46 against the Swiss franc, reversing from its prior low of 124.24. The next possible resistance for the yen is seen around the 120.00 zone.
The yen rebounded to 120.23 against the greenback, 185.25 against the pound and 92.04 against the loonie, off its early 4-week low of 120.99, more than 4-week low of 186.17 and a 2-day low of 92.44, respectively. If the yen climbs further, it may find resistance around 118.5 against the greenback, 180.00 against the pound and 90.00 against the loonie.
The yen, which fell to 134.26 against the euro at 3:00 am ET, reversed direction and strengthened to a new 3-week high of 133.47. Further uptrend may take the yen to a resistance around the 131.00 zone.
Preliminary figures from a Markit Economics survey showed that Eurozone private sector growth unexpectedly strengthened in October to its fastest pace in two months, led by the surprise improvement in the services activity, while manufacturing expansion held steady.
The flash composite purchasing managers’ index that represents both manufacturing and services rose to a two-month high of 54 from 53.6 in September. Economists had expected a score of 53.4.
Looking ahead, Canada CPI data for September, U.S. manufacturing PMI for October and U.S. Baker Hughes rig count data are set to be published in the New York session.
The material has been provided by InstaForex Company – www.instaforex.com