Yen Pops After Slower CPI Declines

The yen is making extraordinary gains on Thursday after some slower than expected inflation reclines released earlier in the day.

Headline Tokyo CPI declined 1.8% year-over-year, slower than calls for a 2.0% pullback and prior 2.1% decline. Excluding fresh food, CPI also fell 1.8%, also slower than calls for no change to the prior month’s 2.0% pullback. CPI excluding fresh food and energy declined by 1.3%, also slower than expectations for a 1.5% pullback and prior month’s 1.4% decline.

Meanwhile national headline CPU fell by 1.3% year-over-year in January, slower than calls for a 1.4% decline and prior 1.7% contraction. Excluding fresh food, CPI declined by 1.3%, in line with forecasts and prior, while CPI excluding fresh food and energy fell 1.2%, also in line with priors and forecasts.

In the immediate aftermath, USD/JPY popped 12 pips to 89.28.

The Japanese yen ignored a very strong bout of economic data out of Japan released just moments later.

Preliminary industrial production advanced 2.5% month-over-month in January, above forecasts for a 1.0% pickup and prior 1.9% gain. Annual production rose 18.2%, also above expectations for a 16.5% gain and prior 5.1% increase.

Meanwhile headline retail sales rose 1.9% month-over-month, above forecast for a 0.3% pickup and reversing a 1.1% contraction in December. Annual sales rose by 2.6%, ousting calls for a 0.2% decline and prior 0.2% fall.

USD/JPY last traded lower by 81 pips at 89.34 after trading in a range of 89.47 to 90.32 today.

Short term resistance lies at 92.15, 92.42 and 92.66, with support at 89.16, 89.15, and 88.56.

Yen Strengthens Very Slightly to New Session High Following Marginally Better than Expected Japanese Q4 GDP Data

Japan’s economy expanded at a slightly faster rate than economists expected in Q4, according to preliminary data released by the country’s government on Monday. The island nation’s GDP rose by 1.1% compared to the consensus call for a 0.9% gain. The expansion followed the flat rate in the previous quarter, which had been originally reported as a 0.3% rise. Meanwhile, annualized, Japanese preliminary Q4 GDP increased 4.6% versus expectations for a 3.5% growth rate and following the flat reading the prior quarter. Following the marginally better-than-expected data, USD/JPY weakened by a slight 0.05 yen to reach 89.98, which, despite the restraint of the move, was a new intraday low for the pair. However, USD/JPY quickly recovered and indeed went on to trade at a higher level than prior to the release. The pair recently traded at 90.08, a rate close to USD/JPY’s session high of 90.13.

Negligible AUD/USD Rise as RBA’s Lowe Says Aussie Economy is Outperforming Other Developed Nations

Australia’s economy is currently better placed than those of its industrialised peers, Reserve Bank of Australia Assistant Governor Lowe said on Thursday. “Unlike many other advanced economies, employment has recently grown strongly and the level of investment remains high,” Lowe told an audience in Sydney. He said that “the central scenario for Australia over the next few years remains a positive one”. Addressing the global economy, Lowe added that risks remain in industrialised nations and in Asia. Focusing on one of the latter region’s major players, he said that there’s a danger of China’s economy overheating if Beijing doesn’t reduce its stimulus. On the domestic front, Lowe said that inflation will remain in target over the next two years. Although the central banker refused to give any hints on the RBA’s monetary policy tightening cycle, he said the bank’s cash rate “has been far from normal”. The AUD/USD firmed by an essentially negligible 7 pips to $0.8979USD following Lowe’s speech. The Aussie dollar’s restrained move can be explained by the fact that the central banker didn’t tell markets anything they didn’t already know.

Yen Weakens vs. the USD as Japanese Tertiary Sector Index Disappoints the Consensus in Dec.

Japan’s tertiary industry index declined more than expected in December, according to data released on Wednesday. The index fell by 0.9% month-over-month, disappointing economists’ expectations for only a 0.2% drop to follow November’s revised 0.1% fall. In the aftermath of the downbeat Japanese data, USD/JPY rose by 0.09 yen to a new session high – just – of 90.29 before stabilizing.

Japanese Deflation Wasn't As Bad As Expected

Japanese machine orders surged in December, rising 20.1% compared to the +8.0% expected and the -11.3% prior. The strong data narrows the year-over-year drop to 1.5% compared to -20.5% in November and -10.8% expected. At the same time, deflation wasn't as bad as expected, according to the corporate goods price index, which showed a 2.1% yearly decline, compared to the -2.3% expected and -3.9% prior.

AUD/USD Falls to Fresh Six-Week Low Following Downbeat Retail Sales Data

Australian retail sales disappointed economists’ expectations in December by falling, according to data released on Thursday (Wednesday evening EST) by the country’s statistics bureau. Seasonally-adjusted, sales fell 0.7% month-over-month, underwhelming the consensus call for a 0.2% rise to bolster the revised 1.5% gain in November. Released simultaneously, Aussie building approvals also defied the consensus in December – however, their surprise was in the opposite direction. Approvals rose 2.2% on the month versus expectations for a flat reading. Nonetheless, the gain in approvals in December was a fraction of their upwardly-revised 10.4% rise the month before. Meanwhile, annualized, approvals increased 53.3% in December, overarching their expected 38.2% gain and previous 33.3% rise. Following the mixed data, AUD/USD sold off by 44 pips to hit $0.8778USD, its lowest level since Dec. 23, when it touched $0.8735USD. The latter level is AUD/USD’s next support to breach. It appears the Aussie dollar reacted to the disappointing retail data, with traders inferring that the Reserve Bank of Australia is now more likely to hold rates at 3.75% at its next meeting due to concerns about the recovery.

AUD/USD Hits New Session High Following Aussie Trade Data

Australia’s trade deficit expanded by less than expected in December, according to data released by the country’s statistics bureau on Wednesday (Tuesday night EST). The trade shortfall increased to A$2252 million versus the consensus call for a rise to A$2400 million from the revised A$1728 million deficit in November. Following the data, AUD/USD rose by 11 pips to $0.8881USD, a new intraday high.

AUD/USD Sells Off as RBA Holds Rates at 3.75% Unexpectedly

Australias central bank announced on Tuesday (Monday night EST) that it has decided to hold its cash target at 3.75%. RBA Governor Glenn Stevens said that information about the early impact of the central banks previous rate hikes is still limited and so the RBA considered it appropriate to uphold the monetary policy status quo. The move surprised the consensus forecast, which had unanimously expected a 25bps hike to 4.0%. In the aftermath of the unexpected decision, the Australian dollar plummeted against the greenback: AUD/USD shed 117 pips to reach $0.8806USD, a new session low. Five-day support for the pair rests not far from AUD/USDs current level at $0.8789, hit on Feb. 1.

Restrained AUD/USD reaction to Above-Consensus Rise in Aussie House Price Index in Q4

Australian house prices continued to increase in Q4, according to data released by the country’s Bureau of Statistics on Monday (Sunday night EST). The Aussie house price index rose 5.2% on the quarter in the last three months of 2009, which was a faster pace than both the 3.5% gain economists had expected and the revised 4.4% increase in Q3. Annualized, prices rose 13.6%, overarching the consensus call for an 11.0% gain and more-than doubling the revised 6.6% rise previously. Despite the upbeat data, the Australian dollar’s reaction was restrained: AUD/USD initially slipped by 4 pips to $0.8857USD, before firming by 8 pips to $0.8865USD. The pair remains close to its session high of $0.8872USD, hit about half-an-hour before the Aussie home prices data’s release.