The yen fell as much as 0.4 per cent against the dollar on Monday following a slew of economic data releases, some of which pegged the currency to depreciate further in the coming months.
The yen was trading at ¥112.83 per dollar, down 0.3 per cent on the day while the dollar index measuring the greenback against a basket of peers was up 0.3 per cent at 93.343.
The move came as the Bank of Japan Tankan survey showed activity at major manufacturers grew in the third quarter to the highest level in a decade and the final reading from Nikkei’s manufacturing gauge showed the sector rose to a four-month high in September as production and new order growth accelerated.
Jingyi Pan, a market strategist at IG in Singapore, said the market reaction was in line with a typical correlation between the yen and outperformance by economic indicators, noting the yen has a unique relationship with data releases due to its status as a safe haven.
“Positive data out of Japan typically boosts risk sentiment”, bolstering the dollar against the yen, Ms Pan told the Financial Times.
Currency forecasts from Japan’s large enterprises coming in lower in the latest BoJ survey than spot prices likely put further downward pressure on the yen, she said.
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