- EUR/JPY is trading higher following comments from Ishiba suggesting he could put pressure on the BoJ to keep interest rates low.
- The pair’s gains may be capped by slower inflation data from the Eurozone’s top economy, Germany.
- The data adds to concerns about the German economy sparked by a second profit warning from carmaker Volkswagen.
EUR/JPY is trading more than half a percentage point higher at 159.60 on Monday after dovish comments from Japan’s new incoming Prime Minister Shigeru Ishiba gave the impression that he would steer monetary policy to remain accommodative. due to economic conditions. His statement suggests it could put pressure on the Bank of Japan (BoJ) to keep interest rates at their current record lows, even though the bank’s policy trajectory points to an increase.
This leads the Euro (EUR) to appreciate against the Japanese Yen (JPY) and the EUR/JPY to rise. However, the pair’s gains will be limited by negative data from the bloc’s largest economy, Germany, pointing to an economic slowdown. The German Consumer Price Index (CPI) missed estimates on Monday, after rising 1.6% annually in September from 1.9% in August, Destatis reported.
The Harmonized Index of Consumer Prices in Germany, the European Central Bank’s preferred indicator of inflation, also fell short of expectations, rising 1.8% annually, below the 2.0% in August and the expectation of the 1.9% market. The disinflationary data makes it more likely that the European Central Bank (ECB) will cut interest rates more aggressively, leading to a weaker Euro, as lower interest rates tend to encourage capital outflows elsewhere. can obtain higher returns.
The news comes after Volkswagen, Germany’s largest carmaker, issued another profit warning on Friday due to increased competition, falling sales in the Far East and conflict with workers’ unions. The automaker lowered revenue, profit and cash flow expectations due to declining demand for its cars, and expects to deliver fewer vehicles this year than in 2023, its fourth annual sales decline in five years. It is the company’s second profit warning in three months and adds to the general air of unease surrounding the German economy.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
