Yen Falls Amid Risk Appetite

The Japanese yen weakened against other major currencies in the Asian session on Thursday amid risk appetite, as the minutes of the U.S. Fed's latest monetary policy meeting reiterated that a majority of participants expect one more interest rate hike will likely be appropriate before the end of the year. The continued decline by treasury yields from 16-year highs also aided the markets.

Traders now await the more closely watched report on U.S. consumer price inflation in the month of September later in the day for clues on the outlook for interest rates.

In economic news, producer prices in Japan were down 0.3 percent on month in September, the Bank of Japan said on or BoJ, Thursday. That missed expectations for an increase of 0.1 percent and was down from 0.3 percent in August. On a yearly basis, producer prices were up 2.0 percent - again shy of expectations for a gain of 2.3 percent and down from the upwardly revised 3.3 percent increase in the previous month.

The BoJ also said overall bank lending in Japan was up 2.9 percent on year in September, coming in at 607.742 trillion yen. That was shy of expectations for an increase of 3.1 percent, which would have been unchanged from the August reading. For the third quarter of 2023, overall lending was up 3.0 percent on year.

Further, the value of core machine orders in Jaan was down a seasonally adjusted 0.5 percent on month in August, the Cabinet Office said on Thursday - coming in at 840.7 billion yen. That missed forecasts for a gain of 0.4 percent following the 1.1 percent drop in July.

On a yearly basis, orders were down 7.7 percent - again missing expectations for a fall of 7.3 percent after tumbling 13.0 percent in the previous month. For the third quarter of 2023, core machine orders are seen lower by 2.6 percent on quarter and 7.9 percent on year.

In the Asian trading now, the yen fell to nearly a 1-month low of 158.61 against the euro and more than a 1-month low of 165.85 against the Swiss franc, from yesterday's closing quotes of 158.35 and 165.32, respectively. If the yen extends its downtrend, it is likely to find support around 160.00 against the euro and 167.00 against the franc.

Against the pound and the U.S. dollar, the yen edged down to 183.82 and 149.28 from yesterday's closing quotes of 183.62 and 149.15, respectively. The yen may test support near 186.00 against the pound and 151.00 against the greenback.

Against the Australia and the Canadian dollars, the yen dropped to near 2-week lows of 95.81 and 109.81 from Wednesday's closing quotes of 95.65 and 109.70, respectively. On the downside, 97.00 against the aussie and 111.00 against the loonie are seen as the next support levels for the yen.

The yen edged down to 89.84 against the NZ dollar, from yesterday's closing value of 89.76. The next possible downside target for the yen is seen around the 91.00 area.

Looking ahead, the European Central Bank releases the account of the monetary policy meeting of the Governing Council held on September 13 and 14, at 7:30 am ET.

In the New York session, U.S. CPI data for September, U.S. weekly jobless claims and U.S. EIA crude oil data are slated for release.

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