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Japanese Yen Whipsaws on Mixed Industrial, Retail Numbers

Japanese Yen Whipsaws on Mixed Industrial, Retail Numbers

David Cottle, Analyst


Talking Points

  • The Japanese Yen had to contend with a mixed data picture on Tuesday
  • Japan’s industrial production fell short in January, but retail sales did better
  • USD/JPY action was muted as markets waited for a Donald Trump speech

The Japanese Yen fell then rose again against the US Dollar on Tuesday after a mixed set of key economic data.

Japan’s preliminary official industrial production was down 0.8% in January from February. That’s the sharpest decline since May 2016. To make matters worse the markets had expected a 0.4% rise to follow December’s 0.7% gain. On year production rose 3.2%, but that was also a miss. Investors had hoped for a 4.3% rise.

However, Japanese retail sales data were released at the same time and they were rather better than expected. Sales rose 0.5% on the month, above the 0.3% rise markets had been looking for. For the year they were up 4%, much better than the 1% gain forecast.

USD/JPY rose to 112.819 in the wake of the figures, from 112.777 just before it. However, it very quickly slipped back again to trade more or less where it had been. This currency pair like most others appears to be in something of a holding pattern pending US President Donald Trump’s policy speech to Congress on Tuesday.

Mixed data, mixed response: USD/JPY

Had this potentially seismic event not been imminent, it’s possible that the markets would have taken a more positive view of the numbers. The retail sales vigor suggests that domestic demand is in better shape and, while the production figures were gloomy, manufacturers seemed fairly optimistic about the future.

The year’s first quarter is getting old. How are the Daily FX analysts’ forecasts bearing up?

--- Written by David Cottle, DailyFX Research

Contact and follow David on Twitter: @DavidCottleFX

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