Retail Sales Slump
According to the Ministry of Economy, Trade and Industry (METI), Japanese retail sales rose by 0.4%, on an annualized comparison in December. Although still positive, the most recent release is far below November’s 2.1% - reflective of major weakness in many retail stores during the holiday season.
As a result, the dip in consumer interest continues to add to speculation that Japanese Prime Minister Shinzo Abe may have to rely on additional tricks up his sleeve in adding stimulus to bolster overall economic growth – as well as support an inflation target of 2%. The notion remains intact despite the government’s trimmed budget plans release yesterday.
Japanese policymakers have proposed a rather aggressive budget measure that includes $1 trillion in spending for the new fiscal year beginning on April 1st. The plan includes major cuts to tax subsidies lent to local governments, education and government worker compensation. However, spending is widely supported in both social welfare programs and public infrastructure. Both sectors are expected to see 10% and 15% increases, respectively.
Level To Keep In Mind
Although the USDJPY remains supported above 90.50 in the near term, the plethora of resistance above is lending to a potential market turn. Currently testing initial resistance via the 91.25 barrier, USDJPY bulls still have to deal with road bumps ahead at 91.96 and 92.32 en route to a 93.00 advance. Failure to pass these levels with ease will place the 89.75 figure into play.
Source: FXTrek Intellicharts
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