USD/JPY is calm on Monday, as the pair continues to trade in the high-101 range late in the European session. Today's highlight is US Pending Home Sales, with the markets braced for a decline in the June release. Over in Japan, consumer spending is in the spotlight, with the release of Household Spending and Retail Sales later in the day. Both indicators have posted two straight declines, and the downward trend is expected to continue. We could see some gains by the yen if either release exceeds expectations.
The US ended the week on a high note, courtesy of strong data from the manufacturing sector. Core Durable Goods Orders jumped 0.8%, beating the estimate of 0.6%, and rebounding nicely from a decline of 0.1% in May. Durable Goods Orders followed suit, posting a gain of 0.7%, compared to a weak reading of -1.0% last month. This easily surpassed the estimate of 0.4%. Unemployment Claims tumbled last week, as the key indicator fell to 284 thousand, its lowest level since February 2008. This surprised the markets, which had expected a reading of 310 thousand. The strong release continues a string of solid employment data, which has helped the dollar. As well, positive news on the employment front is bound to increase speculation about a rate increase by the Federal Reserve.
In Japan, there was good news last week from inflation indicators. Tokyo Core CPI led the way with a gain of 2.8%, edging above the estimate of 2.7%. National Core CPI and the Corporate Services Price Index looked strong, as both posted gains above 3%. The fight against inflation, a major component of the country's monetary policy, has become a success story for the government and Bank of Japan., Deflation has been wiped out after hobbling the economy for some 15 years, and inflation levels continue to rise.
USD/JPY 101.75 H: 101.84 L: 101.75
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