EUR/JPY reaches 182.00 ahead of Eurozone Industrial Production data

The Euro (EUR) is taking advantage of a somewhat softer Japanese Yen (JPY) on Monday, following downbeat Gross Domestic Product (GDP) figures, to trim some of the previous days’ losses and reach session highs above 182.00. In Europe, all eyes are on the Industrial Production release, due later on Monday.

Eurozone’s Factory Output is expected to have contracted at a 1.5% pace in December, reversing November’s 0.7% growth, as well as the moderate advances witnessed in previous months, and casting a shadow over the rhetoric of the Eurozone’s economic resilience. Year-on-year, Eurozone Industrial Production is expected to have slowed to a 1.2% growth, less than half the 2.5% yearly advance seen in November.

The Yen opened the week on its back foot, weighed down by the disappointing economic growth levels seen on Sunday. Japan’s Q4 preliminary GDP showed a meagre 0.1% quarterly growth against market expectations of a 0.4% advance, while the annualised rate grew 0.2%, well below the 1.6% consensus. In the previous quarter, the Japanese economy contracted 0.7% and 2.6% year-on-year.

These figures have put the theory of the Bank of Japan’s (BoJ) March rate hike into question, a feeling that was exacerbated by the meeting between Prime Minister Takaichi and BoJ Governor Ueda earlier on Monday. The BoJ chief, however, said that the meeting addressed general economic and financial developments and denied any request regarding interest rates.

Economic Indicator

Industrial Production s.a. (MoM)

The Industrial Production index, released by Eurostat on a monthly basis, measures changes in the price-adjusted output of industry. It is a widely-followed indicator to gauge the strength in the Eurozone’s manufacturing sector. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

Economic Indicator

Industrial Production w.d.a. (YoY)

The Industrial Production is released by the Eurostat. It shows the volume of production of Industries such as factories and manufacturing. Up trend is regarded as inflationary which may anticipate interest rates to rise. Usually, if high industrial production growth comes out, this may generate a positive sentiment (or bullish) for the EUR, while low industrial production is seen as a negative sentiment (or bearish).