The Japanese yen is slumping against its US counterpart midweek as the latest economic data weigh on the conventional safe-haven asset. The yen has enjoyed a decent start to 2021, but a rising greenback and disappointing domestic figures affected the currency on Wednesday.
The Jibun Bank services purchasing managers’ index (PMI) dipped to 47.7 in December, down from 47.8 in November – anything below 50 indicates contraction. The composite PMI edged up to 48.5 last month, up from 48.1 in the previous month.
Both readings represented the 11th consecutive month of contraction as new business, capacity utilization, business outstanding, and exports were subdued. Business sentiment remained positive.
On Monday, the manufacturing PMI rose to 50 in December, up from 49 in the previous month. This beat the market forecast of 49.7, buoyed by output and employment stabilization. Business confidence also picked up last month. This was also the best reading since January 2019.
According to the Cabinet Office, the consumer confidence index declined to a four-month low of 31.8 in December, with all of the sub-categories falling: overall livelihood, income growth, durable goods consumption, and employment perceptions.
Next on the schedule this week will be foreign bond and stock investment, household spending, foreign exchange reserves, and the coincident and leading economic index numbers.
Meanwhile, new International Monetary Fund (IMF) data highlight that the greenback’s share of global currencies held in reserves fell to just above 60% in the third quarter of 2020. But the yen rose to 6% during the July-to-September period.
The Japanese bond market was mixed in the middle of the first trading week of 2021. The benchmark three-year bond edged up 0.01% to 0.11%. The three-month note rose 0.017% to -0.081%, while the 30-year bond jumped 0.005% to 0.657%.
The USD/JPY currency pair advanced 0.29% to 103.01, from an opening of 102.72, at 19:46 GMT on Wednesday. The EUR/JPY increased 0.55% to 127.00, from an opening of 126.30.