US Retail Sales Preview: what to expect of USD/JPY

The US Census Bureau will release later today the results from Retail Sales, with consensus expecting headline sales to have expanded at a monthly 0.7% during December, extending November’s 0.1% gain.

In addition, Producer Prices are also due and market expectations point to an annualized gain of 1.6%, adding to the revitalized up trend since the summer of 2015.

In view of strategists at TD Securities, “We see scope for a strong December retail sales report following the rather downbeat November release which partly reflected some payback from the prior two months of solid gains… it will be telling whether the marked post-election pickup in consumer sentiment surveys along with holiday shopping patterns translate more pronounced spending in December”.

In the FX space, a solid print today should bring in some respite to the beleaguered greenback, lifting at the same time US yields and thus helping USD/JPY to extend further its rebound from recent lows in sub-114.00 levels. The interim hurdle remains at today’s high in the vicinity of 115.20, while a resumption of the decline should see the initial support emerging at yesterday’s low in the 113.75/70 band.