Yen Falls After Japan Finance Minister Kato Comments

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Friday, after Japan's Finance Minister, Katsunobu Kato, said that increased long-term rates may put pressure on Japan's fiscal condition.

At a press conference, Kato stated, "As we have a high debt-to-GDP ratio, there is a risk of straining our policy costs," referring to the nation's overall debt, which is double that of its GDP.

In addition, speculations of a potential intervention to stop the increase in Japanese government bond (JGB) yields and weaken the JPY were fueled by Bank of Japan (BoJ) Governor Kazuo Ueda.

"We expect long-term interest rates to fluctuate to some extent," reflecting shifting market perceptions of Japan's economic and pricing outlook, Ueda told parliament when asked by an opposition lawmaker about recent rises in bond yields.

"But when markets make abnormal moves and lead to a sharp rise in yields, we are ready to respond nimbly to stabilize markets," such as by increasing bond purchases, Ueda said.

Meanwhile, the Bank of Japan is expected to raise its benchmark interest rate at its upcoming policy meeting in March, according to market estimates.

In economic news, data from S&P Global showed that Japan's private sector logged the fastest growth in five months in February, underpinned by sustained growth in services activity. The au Jibun Bank flash composite output index rose to 51.6 in February from 51.1 in the previous month. The index signaled the fastest growth in the private sector in five months.

The services activity grew at a faster pace, while the manufacturing sector continued to contract in February. The services Purchasing Managers' Index registered 53.1, up from 53.0 in January.

The manufacturing PMI climbed slightly to 48.9 in February from 48.7 in the previous month. The manufacturing output index posted 48.6, up from 47.3 in January.

In the Asian trading today, the yen fell to 2-day lows of 158.23 against the euro, 190.93 against the pound and 167.71 against the Swiss franc, from yesterday's closing quotes of 156.97, 189.38 and 166.43, respectively. If the yen extends its downtrend, it is likely to find support around 162.00 against the euro, 194.00 against the pound and 173.00 against the franc.

Against the U.S. and the Canadian dollars, the yen edged down to 150.74 and 106.34 from Thursday's closing quotes of 149.48 and 105.46, respectively. The yen is likely to find support around 156.00 against the greenback and 108.00 against the loonie.

Against the Australia and the New Zealand dollars, the yen slid to 2-day lows of 96.50 and 86.90 from Thursday's closing quotes of 95.71 and 86.17, respectively. On the downside, 98.00 against the aussie and 88.00 against the kiwi are seen as the next support levels for the yen.

Looking ahead, U.K. retail sales and public finance data for January are slated for release in the pre-European session.

In the European session, PMI reports from various European economies and U.K. for January are set to be published.

In the New York session, Canada retail sales data for December, U.S. S&P Global PMI data for February, U.S. existing home sales data for January, U.S. University of Michigan's consumer sentiment for February and U.S. Baker Hughes oil rig count data are slated for release.