Japanese Yen Soft After Economic Data, Japan-UK Trade Agreement

The Japanese yen was trading either flat or lower against most other currencies, though it managed to gain on the US dollar. Japanese macroeconomic data released on Friday was mixed.
The big news today was the fact that Japan and the United Kingdom formally signed a trade deal that has been agreed in principle back in September. It is the first post-Brexit trade deal the UK signed. Yet many economists are skeptical about the deal as it is expected to boost Britain’s gross domestic product by 0.07% — just a fraction of trade the country is going to lose if it will not achieve a trade agreement with the European Union.
As for macroeconomic data, the Statistics Bureau of Japan reported that the national core Consumer Price Index fell by 0.3% in September on an annual basis. It was the sixth consecutive month without the growth of consumer prices. Month-on-month, the index rose by 0.1%.
The headline au Jibun Bank Flash Japan Manufacturing Purchasing Managers’ Index rose slightly from 47.7 in September to 48.0 in October. The au Jibun Bank Flash Japan Service Business Activity Index dropped a bit from 46.9 in September to 46.6 in October. Both indices were below the neutral 50.0 level, indicating contraction. Bernard Aw, Principal Economist at IHS Markit, commented on the results:

The Japanese private sector started the fourth quarter on a weak footing, with business activity shrinking further in October, according to flash PMI survey data. New business inflows continued to fall in October, though the rate of decline was the slowest in the current sequence of contraction. External demand continued to weaken.

USD/JPY fell from 104.91 to 104.69 as of 10:47 GMT today. EUR/JPY was about flat at 123.98 after falling to the daily low of 123.41 earlier. CHF/JPY was up from 115.57 to 115.71, rebounding from the session minimum of 115.23.
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