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

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

The earlier reading of Tokyo CPI, scheduled for release at 23:30 GMT on Thursday for the world, is expected to come in a bit than 0.6% prior to 0.8%. Further, the Tokyo CPI ex Fresh Food the key inflation gauge, might soften to 0.6% from 0.7% prior. Looking forward, Retail Trade could recover from 2.6% prior drop to -1.1% but Industrial Production is likely to weaken to -9.5% from -3.1%. Additionally, Japan’s Unemployment rate for January month is likely to remain unchanged at 2.2%.

With the recently downbeat Japanese Q4 GDP growth and coronavirus led fears, traders will be on the lookout of further weakness in data for near-term direction.

How could it affect the USD/JPY?

While major consensus is favoring a mild improvement in the headlines, suggesting further USD/JPY weakness, Japanese Q4 GDP and the government’s fiscal plans are likely to keep a lid on the Japanese yen. As a result, the pair traders will look for downbeat figures to take out their sell positions at a profit. However, broad risk aversion and the latest US dollar weakness favor the bears.

Technically, a sustained break of 21-day SMA level of 110 directs the sellers towards an upward sloping trend line from January 08, at 109.00 now. Alternatively, January month high near 110.30 ads to the resistance.

Key notes

USD/JPY Forecast: Holding above 109.65 but not for long

USD/JPY Asia Price Forecast: Dollar pressured near six-day lows vs. Yen, challenging 110.00 figure

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.