Japanese Yen Steady after Retail Sales Contract, Risk Focus Intensifying

Talking Points:

• USDJPY little changed after Japanese data crossed the wires
• Large retailers’ sales fell 0.3% in June versus 1.8% growth expected
• Both the FOMC rate decision and Japanese CPI loom ahead

The Japanese Yen was little changed versus its US counterpart after June’s Japan retail sales and retail trade data crossed the wires. Retail trade decreased to 0.9% year-over-year (YoY) in June versus 1.1% expected and 3.0% the previous month. On a monthly basis (MoM) sales decreased 0.8% versus a 0.9% contraction expected and 1.7% growth the previous month. Large retailers’ sales declined to 0.3% y/y in June versus expected growth of 1.8% and 5.3% the last update. Overall, the data was softer than expectations but not surprising enough to alter expectations for the BoJ, Abenomics or distract from the upcoming session’s high level event risk.

Currently, the Bank of Japan is in the midst of an ¥80 trillion, open-ended quantitative easing effort to bring up inflation to its 2% target. The data appeared to have no significant impact on expectations for the BOJ, whether it be an upgrade or downgrade. Looking at the docket ahead, the FOMC rate decision is later today and Japan’s national CPI figures are due Thursday. These events will likely have more influence over Yen volatility.