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USD/JPY Whipsaws After September U.S. Retail Sales Meet Expectations

USD/JPY Whipsaws After September U.S. Retail Sales Meet Expectations

Talking Points:

- September Advance Retail Sales rises +0.6%, in line with expectations and higher from -0.2% in August

- USD/JPY whipsawed as U.S. September Retail Sales met expectations, with focus now shifting to Yellen

- Check out the DailyFX economic data calendar for market moving releases in the upcoming days.

U.S Retail Sales posted a healthy increase in September after a 0.2% contraction in August, as further gains in the labor market brightened the outlook around consumer spending.

The U.S. Department of Commerce reported that September Advance Retail Sales increased by +0.6%,in line with consensus. Meanwhile, Retail Sales Ex-Autos rose by +0.3% following a 0.2% decline in August, also in-line with expectations. Finally Retail Sales Ex.-Auto and Gas climbed by +0.3% from -0.1% in the previous month.

Advance Retail Sales can have a tendency to be a suitable proxy for personal spending patterns in the economy; therefore strength in the sector may portend a pickup in economic activity, especially as consumption expenditure accounts for approximately 70% of Gross Domestic Product in the United States. Needless to say, this is a welcomed development for the economy as it allays fears that consumer spending may not be sufficient to drive the moderate 1.8% expansion for 2016 that the Fed is anticipating.

Concurrently, but in a separate report, the Bureau of Labor Statistics said that Producer Price Index Final Demand rose +0.3% m/m and +0.7% y/y. Analysts surveyed by Bloomberg News had expected to see a +0.2% m/m +0.6% y/y increase.

Economic data today, however, has been relegated to the background as Janet Yellen is taking the spotlight. The Federal Reserve Chair is set to speak at a Boston Fed Conference at 1:30 PM ET and could provide clues on the timing of the next interest rate move. The Minutes of the September FOMC Meeting pointed to a rate hike relatively soon so the market will look to see if Yellen can reinforce the message that conditions may be appropriate to remove policy accommodation as soon as December.

Here is what’s driving the U.S. Dollar This Morning:

- USD Retail Sales Advance (SEP): +0.6% versus +0.6% expected, from an upwardly revised -0.2%.

- USD Retail Sales Ex. Auto (SEP): +0.5 Versus +0.5% expected, from an downwardly revised -0.2%.

- USD Retail Sales Ex. Auto and Gas (SEP): +0.3 versus +0.3% expected, from -0.1%.

- USD PPI Final Demand MoM (SEP): +0.3% versus +0.2% expected from 0.0%

- USD PPI Final Demand YoY (SEP): +0.7% versus +0.6% expected from 0.0%.

Chart 1: USD/JPY 1-minute Chart Intraday (October 14, 2016)

Immediately, after the Advance Retail Sales Release, USD/JPY rose as high as 104.474. Gains for the greenback, however, were short-lived with the pair trading close to 104.273 at the time this report was written as the market turns its attention to Janet Yellen set to deliver a keynote speech later in the day.

Read more: Fed Rate Hike Odds Steady but LT Challenges Remain for USD

--- Written by Christopher Vecchio, Currency Strategist and Diego Colman, DailyFX Research

To contact Christopher Vecchio, e-mail

Follow him on Twitter at @CVecchioFX

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.