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23/05/24
242
JPY Flat After Mixed Japanese PMIs
On Thursday, the Japanese yen was slightly lower and USD/JPY traded at about 156.70, down 0.08% for the day.
Japanese PMIs for April were mixed and the yen didn’t react much. Services PMI dropped from 54.3 in March to 53.6, and slightly lower than the forecast of 53.8. This was the smallest growth in services since Feb.
Manufacturing PMI improved and rose from 49.6 in March to 50.5 and higher than the 49.7 market estimate. That was the first growth since May last year as manufacturing has slumping for a while.
The Japanese economy is starting to improve after Q1 GDP dropped. Inflation has been declining, which may hamper the ability of the Bank of Japan to hike rates without deflation rearing its head again.
As inflation around the globe falls, major central banks have been considering lowering interest rates. The central banks are however still cautious and the Fed minutes of the May 1 meeting showed that there was a discussion to hike rates again.
Other central banks are also not clear about their rate paths – the Reserve Banks of New Zealand and Australia kept rates steady at their most recent meetings but also discussed hiking rates.
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