Soft Data Prevents Greenback from Gaining Ground
The USDJPY is forming a saucer pattern which reflects upward continuation but is facing headwinds following softer than expected US economic data. Weak wholesale inflation accompanied by lackluster housing data failed to buoy the greenback. Combined with comments from the BOJ’s Kuroda that additional stimulus will not be necessary, the news failed to provide additional market stimulus.
BoJ’s Kuroda said there is no imminent need for more stimuli during his post policy meeting press conference. This confirms the prevailing no-extra-stimulus-for-now market view. There remains a soft consensus that the BoJ will take additional easing measures later in the year, although some Japanese politicians, and allegedly some BoJ board members are concerned that more stimulus might bring unwelcome yen weakness.
In economic data, U.S. PPI fell 0.8% in January, while the core rate dipped 0.1%. There were no revisions to December’s 0.3% slide in the headline and 0.3% core jump. The data continued to show the depressing effects of weakness in energy and food prices. Goods prices dropped another 2.1% after December’s 1.1% decline, paced by energy’s 10.3% plunge, while food prices slumped 1.1%. Services prices were down 0.2%. On an annual basis, producer prices slowed to a 1.6% year over year rate versus 2.1% year over year previously, while the core rate decelerated to a 0.9% year over year rate compared to 1.3% year over year.
U.S. housing starts slid 2.0% to 1.065 million in January, a little better than expected, following December’s 7.1% jump to a 1.087 million clip. Building permits fell 0.7% to a 1.053 million rate from a revised 1.058 million previously. Single family starts dropped 6.7% and multifamily starts rose 7.5% last month.
The USDJPY currency pair hovered near the 10-day moving average at 118.90. Momentum remains positive with the MACD (moving average convergence divergence) printing in positive territory with an upward sloping trajectory.
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