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Japanese Yen Ticks Up After Big Retail Sales Beat

Japanese Yen Ticks Up After Big Retail Sales Beat

David Cottle, Analyst

Talking Points:

  • The Yen gained a little on a sold beat for Japanese retail sales
  • Jobless numbers released a little earlier had been as expected
  • Still, the foreign exchange market is focused elsewhere

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The Japanese Yen didn’t move much following a local data deluge Tuesday, although it gained a little on blockbuster retail sales news from its home country.

Sales rose 3.2% in April, according to official figures. That was smartly above both the 2.3% rise expected and the previous month’s 2.1% gain. It was also the best month seen since early 2015. Still it remains to be seen to what extent if any this apparent willingness to spend will impact still-torpid consumer prices and, thereby, monetary policy.

“Not by much,” may be the answer to that. Retail sales may be very perky but overall household spending fell 1.4% in April, we learned on Tuesday, twice the 0.7% expected.

Data released a little earlier showed that April’s jobless rate was 2.8%, as forecast and unchanged from March. On a brighter note, the job/applicant ratio was ticked up to 1.48. While this is the highest reading since February 1974, it is also an incremental step in a nearly uninterrupted rise from mid-2009, and so seems hardly out of character.

Still, the Yen market is clearly focused elsewhere at present. EUR/JPY remains heavy after European Central Bank President Mario Draghi struck a dovish monetary policy note in Brussels on Monday, as expected.

And, just before the Japanese numbers came out, St. Louis Federal Reserve President James Bullard crossed the wires. He thinks US interest rates are now just about where they ought to be and, if they should rise again, he doesn’t think it should be by very much. It should be noted however that Mr. Bullard is not a voting member of this year’s Federal Open Market Committee.

In any case, USD/JPY looks heavy in the 111.20 area, with the data if anything adding to the weight.

--- 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.