The Japanese yen is unchanged on Friday, as USD/JPY trades in the mid-119 range. On the release front, the US will issue its second estimate of GDP for Q4, with a forecast of 2.1%. This is lower than the initial estimate of 2.6% in January. We’ll also get a look at Revised UoM Consumer Sentiment and Pending Home Sales. In Japan, today’s only event was Housing Starts. The indicator posted a weak reading of -13.0%.
Japanese data was a mix on Thursday. Inflation indicators met expectations in February. Tokyo Core CPI was unchanged at 2.2%, matching the forecast. National Core CPI posted an identical gain, close to the estimate of 2.4%. Consumer spending looked awful. Household Spending plunged 5.1%, worse than the estimate of -4.0%. Retail Sales had its worst showing since May, with a decline of 2.0%. The markets had expected a softer decline of 1.2%. There was some good news on the manufacturing front, as Preliminary Industrial Production climbed 4.0%, well above the forecast of 2.9%.
Thursday’s US inflation and job numbers were not impressive. US inflation indicators continue to struggle. CPI posted a third straight decline, coming in at -0.7%. This was very close to the forecast of -0.6%. Core CPI improved to 0.2%, edging above the estimate of 0.1%. On the employment front, there was disappointing news, as Unemployment Claims jumped to a 6-week high, coming in at 313 thousand. This was much higher than the estimate of 288 thousand.
Janet Yellen testified before Congressional committees on Tuesday and Wednesday, saying that the Fed was “unlikely” to raise interest rates in the next few months, given current economic conditions. Her remarks seemed aimed at quelling rising speculation about a rate hike sometime in mid-2015, which has helped boost the US dollar’s performance against its major rivals. Yellen noted that the continuing economic growth should lead to unemployment continuing to fall, but wages and inflation need to move higher before the Fed raises interest rates.
USD/JPY 119.34 H: 119.44 L: 119.12
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