The Japanese yen dropped against its major counterparts in the Asian session on Wednesday amid rising risk appetite, as most Asian shares rose ahead of the release of Fed minutes that could shed more light on U.S. policy outlook.
The Fed releases minutes of its Jan. 30-31 meeting later today as investors look for further insight on inflation and interest rates. The focus also remains on a slew of speeches by Fed officials for hints about the path for further rate hikes this year.
Data from the Ministry of Economy, Trade and Industry showed that Japan’s all industry activity growth halved in December.
The all industry activity index rose 0.5 percent month-on-month in December, following November’s 1 percent increase. Nonetheless, this was the third consecutive increase in activity and bigger than the expected 0.4 percent rise.
Flash data from IHS Markit showed that Japan’s manufacturing activity grew at a slightly slower pace in February.
The Nikkei flash manufacturing Purchasing Managers’ Index fell to 54.0 in February from 54.8 in January. Nonetheless, a score above 50 indicates expansion in the sector.
The yen that closed Tuesday’s trading at 132.41 against the euro and 114.64 against the franc dropped to 5-day lows of 133.06 and 115.11, respectively. The next possible support for the yen is seen around 135.00 against the euro and 117.00 against the franc.
The yen declined to a weekly low of 107.90 against the greenback and near a 2-week low of 150.93 against the pound, compared to Tuesday’s closing values of 107.32 and 150.17, respectively. The yen is seen finding support around 110.00 against the greenback and 153.00 against the pound.
The yen slipped to a 6-day low of 85.26 against the loonie and near a 2-week low of 79.20 against the kiwi from yesterday’s closing values of 84.84 and 78.84, respectively. If the yen falls further, 87.00 and 80.00 are possibly seen as its support levels against the loonie and the kiwi, respectively.
On the flip side, the yen recovered from an early weekly low of 84.86 against the aussie with the pair trading at 84.66. The pair closed Tuesday’s trading at 84.59.
Data from the Australian Bureau of Statistics showed that Australia’s construction work done plunged in the fourth quarter.
Construction work done declined sharply by 19.4 percent in the fourth quarter, offsetting third quarter’s 16.6 percent increase. This was the first fall in five quarters and also bigger than the expected drop of 10 percent.
Looking ahead, PMIs from major European economies, U.K. public sector finance data for January and jobless rate for three months to December are due in the European session.
In the New York session, Markit’s U.S. manufacturing PMI for February and existing home sales for January are scheduled for release.
The Bank of England Governor Mark Carney, Deputy Governor Ben Broadbent and policy makers Andy Haldane and Silvana Tenreyro will testify on inflation and the economic outlook before the Treasury Select Committee at 9:15 am ET.
At 2:00 pm ET, the Fed minutes from January 30-31 meeting are due.