Article Highlights

  • Japan national core CPI down 3.0% to 2.9%, Tokyo core CPI down from 2.5% to 2.4%
  • Japanese household spending down 4.0% in Oct vs. estimated 4.8% decline
  • Japanese retail sales up 1.4% y/y vs. projected 1.5% increase
  • Japan’s unemployment rate down from 3.6% to 3.5%
  • Japanese preliminary industrial production up 0.2% m/m in Oct
  • New Zealand ANZ business confidence up from 26.5 to 31.5
  • German retail sales and euro zone flash CPI readings due
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Whew, what a data dump from Japan! Most of the readings came in stronger than expected yet the yen still lost ground in the aftermath, as the underlying data indicated persistent weaknesses. Household spending fell by 4.0% in October versus the estimated 4.8% decline while retail sales marked a 1.4% gain, lower than the projected 1.5% increase. The jobless rate improved from 3.6% to 3.5%, but wage growth was practically non-existent.

Inflation reports were also bleak, as the national core CPI fell from 3.0% to 2.9% while the Tokyo core CPI slipped from 2.5% to 2.4%. Stripping the effect of the April sales tax hike places the national core inflation figure at 0.9%, far away from the BOJ’s 2% target and enough to convince most forex market participants that the Japanese central bank could ramp up its easing efforts once more.

USD/JPY is up 0.55% and is on its way to test its previous highs while EUR/JPY is holding on to a 0.37% gain at 22 pips above the 147.00 mark. GBP/JPY is up 0.34% and AUD/JPY is down 0.07% so far.

In New Zealand, the ANZ business confidence report showed an improvement from 26.5 to 31.5, reflecting increased optimism. However, NZD/USD is down 0.49% as of this writing.

The forex calendar shows that the euro might take center stage once more, as Germany is set to print its retail sales report while the region will get its preliminary read on the CPI for November. A decline in the headline figure from 0.4% to 0.3% is expected while the core version of the report might stay unchanged at 0.7%. Bear in mind though that weaker than expected results could revive talks of further ECB easing, which could drive the euro lower.

U.S. Session Recap

Bonnie and Clyde, peanut butter and jelly, Justin Bieber and his hair. Some things just go well together.

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