Japan got pressured under prolonged financial easing policies.

The Japanese yen has rapidly strengthened due to the weakening of the US dollar caused by sluggish job data in the United States, which has increased the likelihood of the Federal Reserve (Fed) raising interest rates again this year. Additionally, investors believe that Japan's rapid yen appreciation may be the result of government intervention, although the Bank of Japan (BoJ) has stated that it has not intervened in the currency's value in any way. However, it may be due to several banks buying yen, as Japan may raise interest rates soon.

The Core Consumer Price Index (Core CPI) in Tokyo has decreased to 2.5%, continuing a continuous decline since the beginning of the year. Core CPI is an important index for predicting nationwide trends, and the BoJ continues to aim for 2%, which could lead to more serious monetary stimulus measures in this round of policy. Despite reiterating at a recent meeting, the BoJ may continue with its easing policy.

Japan's Manufacturing Purchasing Managers' Index (PMI) slightly decreased to 48.5 in September, marking the fourth consecutive monthly decline. This is due to a significant drop in production, the lowest in three months, as well as a decrease in new orders. Orders from China, which were delayed the most, were affected by China's weak economy. In terms of employment, there was a slight increase in hiring, but the expansion of employment decreased. Looking at the number of people, the unemployment rate increased by 10,000 to 1.85 million, while the increase in employment was only 50,000.

Japan's housing starts decreased by 9.4% year-on-year in August, primarily due to a decrease in the construction of new homes since the beginning of the year. There is also a problem of vacant houses in rural areas due to more people moving into cities, as well as a declining birth rate, which will undoubtedly affect the shrinking labor force and the real estate business in the future.

The yield on Japan's 10-year government bonds is around 0.8%, despite BoJ's interventions in the market to reduce yields. BoJ purchased ¥300 billion worth of 5-10 year government bonds on September 29. Nevertheless, global government bond yields have risen due to tightening monetary policies in several countries, leading analysts to predict that this may force Japan to abandon Yield Curve Control in the future.

Techical analysis data (5H)

Resistance: 149.20, 149.45, 149.80

Support: 148.60, 148.25, 148.01

Source: Investing.com