EUR/JPY gains momentum near 156.80 ahead of German Factory Orders

• EUR/JPY gains momentum near 156.85 ahead of the German data. 
• Germany’s trade surplus came in at €16.6B in August vs. €17.7B prior, above the market expectation.
• Japan’s Coincident Index for August came in at 114.3 vs. 114.2 prior; Leading Economic Index improved to 109.5 vs.108.2 prior.
• Traders will monitor the German Factory Orders due later on Friday. 

The EUR/JPY cross attracts some buyers during the early European session on Friday. Market players await the German Factory Orders for August for fresh impetus. The monthly figure is expected to rise 1.8% from an 11.7% fall in the previous reading. The major pair currently trades near 156.85, gaining 0.25% on the day. 

On Thursday, Germany’s trade surplus came in at €16.6B in August from €17.7B in July, above the market expectation of €15.0B. Meanwhile, France’s Industrial Production for August contracted 0.3% MoM from a 0.5% rise in the previous reading, missing the market consensus. 

Markets anticipate the European Central Bank (ECB) to maintain the interest rate by the end of the year, despite inflation levels exceeding the target and rising concerns of a future recession or stagflation in the region. 

On the other hand, the Bank of Japan (BoJ) Governor Kazuo Ueda said last week that there was "a distance to go" for BoJ before exiting its ultra-loose monetary policy. According to the BoJ Summary of Opinions at the Monetary Policy Meeting on September 21 and 22, BOJ said that they do not need to make additional tweaks to YCC as long-term rates moving fairly stably and said that end to negative rate must be tied to the success of achieving 2% inflation. 

Apart from this, Japanese Finance Minister Shunichi Suzuki again declined on Thursday to comment on whether Japan intervened in the FX market. Suzuki noted that there are various factors to consider when determining if currency fluctuations are excessive, and there would be no change in how the government handles them. That said, the potential intervention by the Japanese authorities to support JPY might act as a headwind for the EUR/JPY cross.

The latest data on Friday showed that the Japanese preliminary Coincident Index for August came in at 114.3 versus 114.2 prior whereas the Leading Economic Index improved to 109.5 versus 108.2 prior, beating the estimation of 109.0. Earlier Friday, the Japanese Labor Cash Earnings for August rose by 1.1% YoY versus 1.3% prior, below the estimation of 1.5%. Meanwhile, the nation’s Household Spending dropped 2.5% YoY from a 5% fall in the previous reading, better than the expectation of a 4.3% decline.

Moving on, market players will monitor the German Factory Orders and France’s Trade Balance for August. Traders will take cues from these figures and find trading opportunities around the EUR/JPY cross.