USD/JPY – Japanese yen gains ground as Japanese retail sales jump

The Japanese yen has posted gains in the Thursday session. In North American trade, USD/JPY is trading at 113.30, down 0.34% on the day. On the release front, Japanese retail sales jumped 3.5%, its highest level since December 2017. Later in the day, Japan releases Tokyo Core CPI. In the U.S., the Core PCE Price Index dropped to 0.1%, shy of the estimate of 0.2%. Personal Spending improved to 0.6%, above the estimate of 0.4%. On the labor front, unemployment claims jumped to 234 thousand, well above the estimate of 221 thousand. This was the highest level since May. Later in the day, the Federal Reserve releases the minutes of its November policy meeting. On Friday, the U.S. releases Chicago PMI and Japan publishes consumer confidence. As well, the G-20 begins a two-day summit in Argentina.

The G-20 summit commences on Friday, and the highlight of the show promises to be an expected meeting between President Trump and Chinese President Xi Jinping. An exchange of tariffs between the U.S. and China has taken a bite out of the economies of both and could dampen global economic activity. President Trump has taken a tough line on China ahead of the summit, threatening to raise the tariffs from 10 percent to 25 percent on $250 billion worth of Chinese goods. Given Trump’s unpredictability, it remains unclear if he plans to carry out his threat, or is the sharp rhetoric simply grandstanding ahead of his crucial meeting with Xi.

The Bank of Japan is committed to its target of just below 2 percent, but that goal remains elusive. BoJ Core CPI, the preferred inflation indicator of the bank, edged up to 1.3%, its highest level in 2018 (the indicator posted an identical gain in August). Inflation could face further headwinds, as the slowdown in China and the ongoing global trade war takes a bite out of the country’s export sector. As well, the recent drop in oil prices is also likely to hamper inflation. There is little reason to expect that inflation will gather any upward momentum and some analysts are forecasting that inflation in 2018 will fall below the 1 percent level. Weak inflation means that the BoJ has little incentive to alter its ultra-accommodative monetary policy.

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USD/JPY Fundamentals

Wednesday (November 28)

• 18:50 Japanese Retail Sales. Estimate 2.7%. Actual 3.5%

Thursday (November 29)

• 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.1%
• 8:30 US Personal Spending. Estimate 0.4%. Actual 0.6%
• 8:30 US Unemployment Claims. Estimate 221K. Actual 235K
• 8:30 US Personal Income. Estimate 0.4%. Actual 0.4%
• 10:00 US Pending Home Sales. Estimate 0.8%
• 10:30 US Natural Gas Storage. Estimate -76B
• 14:00 US FOMC Meeting Minutes
• 18:30 Tokyo Core CPI. Estimate 1.1%
• 18:30 Japanese Unemployment Rate. Estimate 2.3%
• 18:50 Japanese Preliminary Industrial Production. Estimate 1.3%

Friday (November 30)

• 00:00 Japanese Consumer Confidence. Estimate 43.3
• 00:00 Japanese Housing Starts. Estimate 0.4%
• Day 1 – G-20 Meetings
• 9:45 US Chicago PMI. Estimate 58.6

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, November 29, 2018

USD/JPY November 29 at 10:30 EST

Open: 113.68 High: 113.68 Low: 113.19 Close: 113.30

USD/JPY Technical

USD/JPY edged lower in the Asian session. The pair was flat in the European session and this trend has continued in North American trade

• 112.30 is a weak support line
• 113.75 is the next resistance line
• Current range: 112.30 to 113.75

Further levels in both directions:

• Below: 112.30, 111.20 and 110.28
• Above: 113.75, 114.73, 115.50 and 116.55

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.