Year-over-year, core machinery orders declined by 0.7% after being down 5.0% year-over-year in December. Economists expected core machinery orders to fall by 1.4%.
The latest figures could influence the Bank of Japan’s plans to exit from negative rates. After falling into a technical recession in Q4, an improving demand environment could enable the BoJ to begin considering a pivot.
However, wage growth and demand-driven inflation remain the areas of focus. Significantly, bets on an April BoJ pivot from negative rates linger despite the Q4 GDP numbers.
Beyond the economic data, investors must monitor intervention threats and Bank of Japan chatter. Intervention threats could impact the USD/JPY, while dovish BoJ commentary could affect demand for the Yen.
On Monday, investors must consider FOMC member commentary. Reactions to the recent inflation reports and views on interest rate cuts warrant investor attention.
Support to delay rate cuts until H2 2024 could drive buyer demand for the USD/JPY.
