On Monday, the Bank of Japan released the Producers Inflation Data which increased by 5.5% year – on – year in August. That number was higher than the previous period.
The PPI value this time is still in the higher area for 13 years because the high global commodity as well. In a month – over – month basis, the Japan’s PPI doesn’t increase at all.
People say that it is stagnant. Besides reversing from the previous month increase, this condition is not in line with the economist expectation. They predict that the rising is about 0.2%.
The Japan’s producer inflation in July was mostly supported by the increasing chemical, wood, and steel. It is because the demand on those goods are still strong.
Meanwhile, the fuel price in August is moderate. The high inflation right now is becoming a problem because it is weighting on the companies and may cut the profit margin.
The Japan’s Companies and the Dilema
It cannot be denied that some companies in Japan is now facing the difficult dilemma. It is caused by the raw material price increase in the international market right now.
That situation makes the production price is also rising. The fact is that, a company cannot rise their price straightly and easily to the consumers Due to their ability to buy something.
Their purchasing power is so sensitive in this COVID-19 pandemic. Some experts predicted that it will be harder for the producers to suit goods' increase to their consumers.
It is especially when the consumption level is weakening as the impact of the COVID-19 restriction. That is why; BOJ may be forced to continue the huge loosening program in recent situation.
USD/JPY Pair Is Consolidated
Japan's PPI data this morning did not have a high impact on the yen's currency movement against the US dollar. At the time this news was revealed, the USD/JPY pair was in the range of 109.91.
It was only strengthening by 0.04 percent from the daily Open level. Mostly, The pair is moving flat in relation to the tug-of-war of risk aversion sentiment on the US Dollar and Japanese Yen.
Both of them are the safe haven status. Furthermore, the investors' attention will be focused on the release of inflation data in the America highlighted by the market to assess the Fed's tapering outlook.
It is especially in the near term period. Meanwhile, gold is elongated its consolidation at the beginning of the week and it is still limited around the tight trading under the level of $1.800.
The Risk – On Surprise
The risk – on supports around the equity market becomes a holder from the XAU / USD safe – haven. Aside from that, the stronger US dollar in the middle of the expectation brings something.
It is for the Fed’s reduction announcement that will be happened further. The will be collaborate to limit the upper side commodity. The US employment report is dissapointing.
Aside from that, the investors seem believe that the Fed will start to back their huge stimulus for the pandemic era faster than before. The further speculation is supported by a comment from Patrick Harker.
On Monday, that Philadelphia The Fed President said that the policy makers want to cut for about $120 billion in the monthly obligation purchase.
Why the Gold Commodity Declines
The moderate decline for the United States obligation treasury yield result help the gold weakening. It is because that commodity doesn’t give the result, at least for this time.
In line with the concern about the delta variant which spread so fast and the global economy also down, that makes some added supports are longer for the gold.
The investors are waiting for the new catalyst from the US macro important release this week. Those are the newest consumers inflation number and monthly retail sales data.
