People will look for a reason to buy the dollar as the currency's drop this month isn't warranted given the outlook for further rate increases. They may use figures such as production data as a reason to buy the dollar.
It will probably be a long way off before we get to a 2 percent inflation rate, meaning the BOJ is not going do any imminent rate increases. That will keep the rate-differential theme and push the yen lower.
The weak data is adding to concern over the economic outlook in Japan, which is negative for the yen.
The yen got its boost because Fukui's comments signaled the moment of truth is approaching. An end to the super-easy policy in April could be a done deal, and the bank may raise rates in the last six months of 2006.