Yen Falls On Trade Deal Hopes

(RTTNews) - The Japanese yen weakened against other major currencies in the European session on Wednesday as European stock markets traded higher amid expectations of a potential trade deal with the United States.

Media reports suggested that China had quietly compiled a list of U.S.-made goods exempt from its 125 percent tariffs - seeking to ease trade tensions without public concessions.

U.S. President Donald Trump said he believes the U.S. will have a deal with India on trade.

The White House has also had "substantial talks" with Japan, and "the contours of a deal" with South Korea could be coming together, Treasury Secretary Scott Bessent said.

Instead of making aggressive wagers, traders may decide to hold off until Thursday's important Bank of Japan (BoJ) policy announcement. In light of growing threats to the fragile economy from U.S. tariffs, the central bank is generally expected to maintain stable interest rates. Nonetheless, indications of rising inflation in Japan allow for additional adjustment of BoJ policy.

The JPY fell earlier in the Asian trading today against its major peers, after the release of weaker-than-expected industrial production and retail sales data from Japan.

Data from the Ministry of Economy, Trade and Industry showed that the industrial production in Japan was down a seasonally adjusted 1.1 percent on month in March. That missed forecasts for a decline of 0.5 percent following the 2.3 percent increase in February.

On a yearly basis, industrial production was down 0.3 percent.

Data from the METI also showed that the value of retail sales in Japan was up 3.1 percent on year in March, coming in at 14.063 trillion yen. That missed expectations for an increase of 3.6 percent and was up from 1.3 percent in February.

On a seasonally adjusted monthly basis, retail sales fell 1.2 percent.

In other economic news, data from the Cabinet Office showed that Japan's leading index decreased as initially estimated in February. The leading index, which measures future economic activity, dropped to 107.9 in February from 108.2 in January. That was in line with the flash data published on April 7.

Meanwhile, the coincident index that measures the current economic situation came in at 117.3, up from 116.4 in the previous month. The latest score was revised up from 116.9.

In the European trading today, the yen fell to a 2-day low of 162.65 against the euro, from an early 1-week high of 161.72. The yen is likely to find support around the 164.00 region.

The yen reached to yesterday's low of 173.39 against the Swiss franc, from an early high of 172.65. On the downside, 176.00 is seen as the next support level for the yen.

Against the U.S. and the Canadian dollars, the yen slid to 2-day lows of 143.15 and 103.48 from early highs of 142.18 and 102.83, respectively. If the yen extends its downtrend, it is likely to find support around 149.00 against the greenback and 105.00 against the loonie.

The yen edged down to 191.26 against the pound, from an early high of 190.63. The next possible downside target for the yen is seen around the 194.00 region.

Looking ahead, German CPI data for April, Canada GDP data for February, U.S. ADP employment data for April, U.S. GDP data for the first quarter, U.S. Chicago PMI for April, U.S. personal income and spending for March, U.S. PCE price index for March, U.S. pending home sales for March and U.S. EIA crude oil data are slated for release in the New York session.