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Yen Ticks Up On Japan CPI Gain, "Core" Remains Mired

Yen Ticks Up On Japan CPI Gain, "Core" Remains Mired

David Cottle, Analyst


Talking Points

  • The headline Japanese CPI print looked strong enough
  • But that was as far as Tokyo’s luck held
  • The rest of the morning’s data dump was stubbornly weak

Consumer prices in Japan rose at their fastest pace for a year in November, according to official figures released on Tuesday; and the Yen ticked lower against the US Dollar after their release.

The Consumer Price Index rose by 0.5% on-year, which was what the markets had been expecting, well above the 0.1% seen in October.

However, while this looks like good news for the Japanese government, which has been trying for years to return some pricing power to the economy, the rest of the morning’s data must have been far less cheering.

The “core” CPI print, which strips out the volatile effects food prices, fell by 0.4% on-year. That made it exactly the same as October’s print and a tick weaker than the markets had hoped for. The CPI for Tokyo alone, which is released a month earlier, was flat for December, well below expectations.

Household spending also registered a huge miss in November, falling by 1.5% on the year rather than the modest-enough 0.1% gain expected.

The jobless rate ticked up, rising to 3.1%, from October’s 3%.

USD/JPY slipped to 117.18 after the data, from 117.23 beforehand. The market looks predictably thin, as well it might sandwiched between the Christmas and New Year breaks. The overall tone of the greenback looks very solid, though despite some clear and unsurprising profit taking from the 14-year peaks seen just before markets wound down.

All in all, these data suggests that Japan’s domestic economy remains worryingly stuck in low gear, and will do little to damage the thesis that Yen accounts will be looking for better places to put their money in 2017.

USD/JPY in holiday mode

Chart compiled using TradingView

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--- Written by David Cottle, DailyFX Research

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