Japan’s Machinery Orders Collapse 8.2%; Japan Ready to Take Bold Action on Currency

Japan’s central bank’s interventions have been ineffective, yet they are ready for it again.

From Reuters:

Japan's core machinery orders tumbled in July at twice the pace economists' had expected in a sign that companies are delaying investment due to worries about a strong yen, slackening global growth and slow progress in reconstruction from the March earthquake.

The current account surplus fell more in the year to July than the median estimate as exports weakened, highlighting concerns that a strong yen and a stuttering global economy could hamper Japan's recovery from the post-quake slump.

The disappointing data could place some pressure on the government and the Bank of Japan, which highlighted risks to growth after leaving monetary policy on hold on Wednesday, to ensure that the yen doesn't strengthen further.

The yen has been attracting safe-haven demand from investors unsettled by Europe's sovereign debt crisis and signs of U.S. economic slowdown even as Japan struggles with its own debt burden and its new government faces a long battle to gain consensus over how to fund reconstruction from the March 11 earthquake and tsunami.

Core machinery orders fell 8.2 percent in July from the previous month due to declines in orders from manufacturers and service sector firms, Cabinet Office data showed on Thursday. That compared with a median market forecast for a 4.1 percent decline and follows a 7.7 percent rise in June.

Japan is on guard against further yen appreciation after intervening in currency markets last month when its currency approached a record high versus the dollar.

Japan's economy probably shrank at a faster annualized pace in the second quarter than the government's initial estimate as corporate spending fell at a quicker rate due to the strong yen and a slowdown in the global economy, a Reuters poll showed before the release of the data on Friday. ($1 = 77.325 Japanese Yen)

http://www.reuters.com/article/2011/09/08/us-japan-economy-idUSTRE78705E20110908

From Bloomberg:

Japanese Finance Minister Jun Azumi said he will tell his Group of Seven counterparts that his country remains prepared to take “bold” action in currency markets when necessary. He spoke to reporters today in Marseille, France.

http://www.bloomberg.com/news/2011-09-08/azumi-says-he-will-tell-g-7-japan-ready-to-take-bold-action-on-currency.html