Ella 
In the early Asian market on Tuesday, the euro/yen cross continued its upward trend, trading in the positive zone for the fourth consecutive day. EUR/JPY is currently trading around 158.60, up 0.04% on the day. Rising unemployment in Japan and hawkish comments from European Central Bank (ECB) policymakers put some pressure on the yen.
On Monday, French Finance Minister Bruno Le Maire denied that an interest rate cut was imminent. The policymaker added that a rate cut would need to see inflationary pressures in the services sector. Meanwhile, European Central Bank (ECB) policymaker Joachim Nagel said it was impossible to tell whether the ECB should raise rates at its September meeting.
On top of that, ECB President Christine Lagarde told a Jackson Hole symposium that the battle against inflation has not yet been won. ECB President Christine Lagarde emphasized the importance of the central bank providing a nominal anchor for the economy and ensuring price stability, while setting interest rates at restrictive levels until the ECB’s medium-term inflation target of 2 percent is achieved. The euro was boosted by the European Central Bank’s hawkish stance, acting as a “tailwind” for EUR/JPY crosses.
Japan’s unemployment rate rose to 2.7% in July from 2.5% in the previous month, in line with expectations, the latest data from Statistics Japan showed. Japan’s unemployment rate rose for the first time in four months, putting pressure on the Bank of Japan (BoJ) and the government.
Bank of Japan Governor Kazuo Ueda said at the Fed seminar on Saturday that the central bank believes that the underlying inflation rate is below its target, so it will maintain the current ultra-loose monetary policy framework. Policymakers said domestic demand remained strong and corporate fixed investment was sustained by record high profits. Still, the divergence in monetary policy between the ECB and the Bank of Japan may limit the yen’s upside against its rivals.
Next, market participants will focus on key Eurozone data for fresh impetus. German consumer price index (CPI) data is due on Wednesday, while German retail sales and Eurozone CPI data are due on Thursday. In addition, the ECB will publish the minutes of its meeting on Thursday. In Japan, consumer confidence, industrial production and retail sales data for August will be released later this week.
