USD/JPY – Dollar Hits Six-Week Highs on Weak Japanese Data

USD/JPY continues to post gains on Wednesday, as the pair has climbed to the low-102 range. The yen has been struggling, and has surrendered about 100 points in just over a week. On the release front, it's a busy day, with three key events out of the US - Advance GDP, ADP Nonfarm Payrolls and the Federal Reserve Policy Statement. We could see some strong movement in the markets following these releases. In Japan, Preliminary Industrial Production disappointed on Wednesday, posting a 3.3% decline. There are no Japanese releases on Thursday.

Japanese data continues to struggle this week. Preliminary Industrial Production, an important manufacturing release, posted a sharp drop of 3.3% in June, worse than the forecast of a 1.0% decline. This was the sharpest decline since June 2013. This follows dismal news on Tuesday, as consumers continue to keep a tight grip on the purse strings. Household Spending declined by 3.0%, the third straight drop. The figure did, however, beat the estimate of -3.7%. Retail Sales, the primary gauge of consumer spending, posted a decline of -0.6%, worse than the estimate of -0.4%. This was also a third straight decline. As well, Unemployment Rate rose to 3.7%, above the estimate of 3.5% and the highest level recorded since January. These figures point to trouble in the economy, as a decrease in consumer spending will likely translate into weaker economic growth and put more pressure on the struggling Japanese yen.

CB Consumer Confidence was outstanding in June. The key indicator jumped to 90.9 points, crushing the estimate of 85.5 points. This was the indicator's highest level since September 2007. Consumer confidence is closely tracked by analysts since a confident consumer is likely to increase consumption, which is critical for economic growth. The strong reading has helped the dollar posts gains against the retreating yen.

USD/JPY 102.26 H: 102.28 L: 101.07