When is Japan’s data-dump and how could it affect the USD/JPY?

Japan’s April month Retail Trade, Preliminary reading of Industrial Production and May month Tokyo Consumer Price Index (CPI) are among the data up for publishing amid the initial Asian session on Friday.

The earlier reading of the Tokyo Consumer Price Index (CPI), scheduled for release at 23:30 GMT on Thursday for the world, flashed a 0.2% mark in April and could ease further. Further, the Tokyo CPI ex Fresh Food, the key inflation gauge, might remain on the back foot around -0.2% versus -0.1% prior. Looking forward, Retail Trade could magnify the previous fall of 4.7% with -11.5% expected figures whereas Industrial Production could also shrink further by 5.1% versus -3.7% earlier reading.

Even if the recent comments from the Bank of Japan (BOJ) Governor reiterated the readiness to increase the monetary stimulus if needed, the importance of incoming statistics remains key for further decision making. It should also be noted that Bloomberg's report citing likely seven-year high bankruptcies by the Japanese firms could weigh on the USD/JPY if the data matches downbeat forecasts.

How could it affect the USD/JPY?

While the risk catalysts have recently been lighter, mainly due to the equities’ upbeat performances, the underlying fears aren’t yet wiped out. To convey the same, policymakers from the major central banks, including the BOJ remain cautious while showing readiness to accelerate the efforts to combat the coronavirus (COVID-19) if needed. As a result, downbeat results of the headlines economies could weigh on the Japanese yen (JPY).

Technically, buyers keep targeting the 108.05/10 area comprising multiple highs marked since April-19. However, a 200-day SMA level around 108.35/30 could keep the bulls checked then after. On the downside, a sustained break below an ascending trend line from May 13, near 107.40, could recall sellers targeting the mid-month low near 106.75 and the monthly bottom around 106.00.

Key notes

USD/JPY Forecast: Market keeps ignoring safe havens

USD/JPY Asia Price Forecast: Greenback trades off the May’s highs vs. Japanese yen

About Tokyo CPI

The Tokyo Consumer Price Index is released by the Statistics Bureau and it's a measure of price movements obtained by comparison of the retail prices of a representative shopping basket of goods and services. The index captures inflation in Tokyo. CPI is the most significant way to measure changes in purchasing trends. The purchase power of JPY is dragged down by inflation. Generally a high reading is seen as positive.

About Japan’s Retail Trade

The Retail Trade released by the Ministry of Economy, Trade and Industry captures the aggregate sales made through a business location (usually a store) in which the principal activity is the sale of merchandise and related services to the general public, for household or personal consumption. Consumer spending is a key important indicator for the Japanese economy. A high reading is positive for the JPY, while a low reading is negative.

About Japanese Industrial Production

The Industrial Production released by the Ministry of Economy, Trade and Industry measures outputs of the Japanese factories and mines. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. A high reading is seen as bullish for the JPY, whereas a low reading is seen as bearish.