Japan Core Machinery Orders Unexpectedly Slide in March
It was a relatively busy start to the week on the Asian economic calendar. This morning, core machinery orders from Japan were in focus.
After the better-than-expected Q1 GDP numbers and hotter inflation figures, today’s stats could further fuel bets on a Bank of Japan tweak to the ultra-loose monetary policy mantra.
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However, core machinery orders fell by 3.9% in March, following a 4.5% tumble in February. Year-over-year, core machinery orders were down 3.5% versus a rise of 9.8% in February. Economists forecast orders to increase by 0.7% in March and 1.4% year-over-year.
According to the Cabinet Office,
- Machinery orders fell by 8.7% in Q1, while core machinery orders increased by 2.6%.
- In Q2, manufacturers forecast core machinery orders to rise by 4.6% and for machinery orders to increase by 6.3%.
USD/JPY Reaction to Core Machinery Orders
Ahead of the machinery orders, the USD/JPY fell from a pre-stat high of 138.001 to a low of 137.573 as investors responded further to the Powell speech.
However, in response to the stats, the USD/JPY rose to a post-stat high of 137.749 before falling to a low of 137.615.
This morning, the USD/JPY was down 0.20% to 137.635.
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Later this morning, the People’s Bank of China will also draw interest. Economists expect the PBoC to leave Loan Prime Rates unchanged. A surprise move to ease monetary policy would support riskier assets. Economic indicators from China have raised red flags, with Japanese exports to China also waning.
Looking ahead to the US session, it is a quiet day on the US economic calendar. There are no US economic indicators for investors to consider. The lack of stats will leave Fed chatter to influence.
FOMC members Bullard, Bostic, and Barkin will deliver speeches today. Following Fed Chair Powell’s more dovish forward guidance on Friday, hawkish comments would fuel monetary policy uncertainty and likely raise the bets on a June interest rate hike.
However, debt ceiling talks will also draw interest, with US President Joe Biden and Speaker of the House Kevin McCarthy speaking today.