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.