Yen Falls As Japan's Weak PMI Data Damps BoJ Rate Hike Hopes

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Monday, as the weak Japan Manufacturing PMI almost closed the doors for the Bank of Japan rate hike in the upcoming monetary policy meeting.

Data from Jibun Bank showed that the manufacturing sector in Japan continued to contract in March, and at a faster pace, with a manufacturing PMI score of 48.3. That's down from 49.0 in February, and it moved further beneath the boom-or-bust line of 50 that separates expansion from contraction.

The services sector also slipped into contraction, falling to 49.5 in March from 53.7 in February.

The BoJ may be forced to postpone rate hikes due to the weaker growth outlook.

Meanwhile, Chinese and Australian officials warned of widespread shocks to the global economy from U.S. trade policy. Meanwhile, U.S. President Donald Trump signaled flexibility on upcoming reciprocal tariffs set to be imposed April 2.

However, Trump said during the same remarks in the Oval Office that providing exceptions for one country means "you have to do that for all," furthering the uncertainty about his plans.

In the Asian trading now, the yen fell to 4-day lows of 162.32 against the euro and 169.68 against the Swiss franc, from Friday's closing quotes of 161.46 and 169.00, respectively. The yen is likely to find support around 165.00 against the euro and 172.00 against the franc.

Against the pound and the U.S. dollar, the yen slipped to 5-day lows of 193.79 and 149.96 from last week's closing quotes of 192.83 and 149.31, respectively. On the downside, 195.00 against the pound and 154.00 against the greenback are seen as the next support levels for the yen.

Against the Australia and the Canadian dollars, the yen dropped to a 4-day low of 94.26 and a 5-day low of 104.57 from Friday's closing quotes of 93.60 and 104.05, respectively. If the yen extends its downtrend, it is likely to find support around 165.00 against the euro, 172.00 against the franc, 97.00 against the aussie and 107.00 against the loonie.

The yen edged down to 86.08 against the NZ dollar, from Friday's closing value of 85.57. The next possible downside target for the yen is seen around the 88.00 region.

Looking ahead, PMI reports from various European economies and U.K. for March are slated for release in the European session.

In the New York session, Canada manufacturing sales data for February, U.S. Chicago Fed National Activity index for February and U.S. S&P Global PMI reports for March are set to be published.