FOREX MARKET - JPY

Labour market data for July this morning came out in line with expectations with the unemployment rate dipping slightly to 4.1% from 4.2% in June.

However the yen continues to be very weak against the euro after last week's much lower than expected CPI result on Friday caused Japanese yields to slump.

The unemployment and CPI data support our economists stance that the BoJ won't lift rates until Q1 next year now following last week's re-weighting of Japan's CPI survey.

But we think the yen will still benefit from USD weakness as the market starts to focus on the Fed cutting rates next year and as attention switches to structural issues and global imbalances during September's G7 and IMF meetings.