USD/JPY – Yen gains ground as Japanese GDP rebounds

USD/JPY has edged lower in the Thursday session. In the North American session, the pair is trading at 110.76, down 0.25% on the day. On the release front, Japanese Preliminary GDP gained 0.3%, shy of the estimate of 0.4%. In the U.S., consumer spending slumped in January. Retail sales fell 1.2% and core retail sales plunged 1.8%. PPI declined 0.1% and unemployment claims jumped to 239 thousand, well above the estimate of 225 thousand. On Friday, the U.S. releases UoM consumer sentiment.

Japanese GDP rebounded in the fourth quarter with a gain of 0.3%, after a decline of 0.6% in the third quarter. Business and consumer spending improved, helping the economy expand. Exports rose 0.9% in Q4, the strongest growth in a year. Still, there is concern that exports will be down in 2019 if the trade dispute between the U.S and China continues. Japanese exports of car parts and electronics to China are particularly vulnerable to the slowdown in China, and if the trade conflict continues, Japan could find itself in a recession.

Inflation levels in the U.S. remain low, despite a strong U.S. economy and strong labor market. CPI showed no change in January, and has failed to post a gain since November. Core CPI has recorded weak gains of 0.2% for four successive months. On an annualized basis, CPI gained 1.6% in January, the weakest year-over-year gain since mid-2017. The soft inflation numbers were a result of low energy prices, which fell 3.1% in January as oil prices remain under pressure.

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USD/JPY Fundamentals

Wednesday (February 13)

• 18:50 Japanese Preliminary GDP. Estimate 0.4%. Actual 0.3%
  
• 18:50 Japanese Preliminary GDP Price Index. Estimate -0.4%. Actual -0.3%
  

Thursday (February 14)

• 8:30 US Core Retail Sales. Estimate 0.0%. Actual -1.8%
  
• 8:30 US Retail Sales. Estimate 0.1%. Actual -1.2%
  
• 8:30 US PPI. Estimate 0.1%. Actual -0.1%
  
• 8:30 US Core PPI. Estimate 0.2%. Actual 0.3%
  
• 8:30 US Unemployment Claims. Estimate 225K. Actual 239K
  
• 10:00 US Business Inventories. Estimate 0.3%. Actual -0.1%
  
• Tentative – US Mortgage Delinquencies
• 10:30 US Natural Gas Storage. Estimate -79B
• 23:30 Japanese Revised Industrial Production. Estimate -0.1%

Friday (February 15)

• 8:30 US Empire State Manufacturing Index. Estimate 7.1

*All release times are EST

*Key events are in bold

USD/JPY for Thursday, February 14, 2019

USD/JPY February 14 at 11:10 EST

Open: 111.01 High: 111.13 Low: 110.50 Close: 110.73

USD/JPY Technical

USD/JPY showed limited movement in the Asian session. The pair was mostly flat in European session and has moved higher in North American trade

• 110.28 is providing support
• 110.90 has switched to a resistance role after losses by USD/JPY on Thursday
• Current range: 110.28 to 110.90

Further levels in both directions:

• Below: 110.28, 109.37, 108.11 and 107.36
• Above: 110.90, 112.16 and 112.93

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