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Japanese Yen Dips, Inflation Rises

By MarketPulse (Kenny Fisher)CurrenciesDec 28, 2022 12:20AM ET
Japanese Yen Dips, Inflation Rises
By MarketPulse (Kenny Fisher)   |  Dec 28, 2022 12:20AM ET
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US and Japanese markets are open on Tuesday, but trading remains thin after the Christmas holiday. There are some key Japanese events on the calendar, although US releases are all tier-2 events. In the North American session, USD/JPY is trading at 133.41, up 0.44%.

Retail Sales slower in November

There are a host of events out of Japan today. Retail sales rose for a ninth consecutive month in November, buoyed by the tourist trade after Japan opened its borders. Still, the gain of 2.6% y/y was well off the 4.4% gain in October and 4.8% in September and below the consensus of 3.7%. Household and consumer consumption account for more than half of economic growth, so the downtrend is worrying. Japan’s economy contracted in Q3 as a poor global outlook, the slowdown in China, and a weak yen squeezed economic growth.

Inflation continues to rise in Japan, although the levels pale compared to what the US, the UK, and the eurozone are experiencing. The Bank of Japan’s preferred inflation gauge, BOJ Core PCI, accelerated for a ninth month in November, rising to 2.9% y/y, up from 2.8% and above the consensus of 2.7%.

Last week, Japan’s Core CPI rose 3.7% y/y in November, its highest level since 1981. Inflation is increasing as firms continue to pass along higher costs to consumers, unable to absorb the rise in energy, food, and raw materials. The rise in inflation hasn’t budged with the BoJ, with Governor Kuroda saying that inflation would fall below the 2% target in 2023.

Kuroda stated on Monday that widening the yield curve band was not a prelude to an exit from the Bank’s ultra-loose policy. We’ll get more details of that dramatic move later today with the BoJ Summary of Opinions release from last week’s policy meeting. The report should make for some interesting reading.

USD/JPY Daily Chart
USD/JPY Daily Chart

USD/JPY Technical

  • 133.62 is a weak resistance line. Above, there is resistance at 134.12
  • There is support at 132.80 and 131.83

Original Post

Japanese Yen Dips, Inflation Rises

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Japanese Yen Dips, Inflation Rises

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