USD/JPY is almost unchanged on Friday, as USD/JPY is trading slightly above the 120 line. Japanese markets were open on Christmas Day, and there were a host of Japanese releases, led by inflation and consumer spending reports. On Friday, the sole Japanese release, Average Cash Earnings, missed expectations with a decline of 1.5%. There are no US releases on Friday.
With US and European markets closed on Thursday, the spotlight shifted to Japan, which released a batch of key events. Tokyo Core CPI, the key inflation indicator, edged down to 2.3% in November, matching the market forecast. However, the indicator continued a worrying downward trend, dropping for a fourth straight week. Consumer demand remains weak, as Household Spending posted a sharp decline of 2.5%. Retail Sales posted a gain of 0.4%, but this was well short of the forecast of 1.2% and the weakest showing since June. There was no relief from the manufacturing front, as Preliminary Industrial Production fell by 0.6%, well short of the estimate of a 1.0% gain. The weak numbers paint a grim picture of the health of the Japanese economy as we head into 2o15. Prime Minister Abe, armed with a fresh mandate after recent elections, is under strong pressure to reinvigorate economic activity and is expected to unveil new stimulus measures on Saturday.
In the US, there were a host of key events on Tuesday, with mixed results. GDP was red-hot in Q3, jumping 5.0%, ahead of the estimate of 4.6%. This marked the indicator’s strongest gain since the third quarter of 2003. The US economy is expected to continue to surge in 2015, driven by increased consumer spending and lower oil prices. The news was not as positive from Core Durable Goods Orders, which posted a decline of 0.4%, its fourth decline in five readings. The reading was well off the estimate of 1.1%. Durable Goods Orders looked even worse, with a reading of -0.7%. This surprised the markets which had anticipated a strong gain of 3.0%. UoM Consumer Sentiment continues to rise, hitting 93.6 points in December. This marked its highest level since February 2007, as the US consumer remains very optimistic about the economy as we move into 2015.
USD/JPY 120.28 H: 120.43 L: 120.15
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