USD/JPY faces barricades around 145.00, focus shifts to US Retail Sales – by Sagar_Dua24 USDJPY BOJ Fed Inflation RetailSales
Significant jump in US core CPI strengthened the odds of a third consecutive 75 bps rate hike by the Fed.has sensed selling pressure while attempting to surpass a 24-year high at 144.99 in the Tokyo session. After a juggernaut rally, the asset is displaying exhaustion signals and is expected to remain subdued ahead. On Tuesday, the major surged sharply from a low near 142.00 after the release of the USThe US Bureau of Labor Statistics reported the headline inflation rate at 8.
The catalyst which is responsible for a bumper rally in the US dollar index is the increment in core CPI that excludes oil and food prices. The economic data landed at 6.3% higher than the forecasts of 6.1% and the prior release of 5.9%. One could gauge the fact that headline CPI is light led by falling gasoline prices whereas price pressures in durable goods have increased significantly. This also indicates that signs of exhaustion in the inflation rate have faded away and the inflation saga is back to square.
This week, the major trigger will be US Retail Sales data, which is showing no improvement in the overall demand. On the Tokyo front, the depreciating yen is creating prolonged hurdles for the Japanese economy. There is no denying the fact that a weaker yen is accelerating tourism and soaring exports but at the same time is demolishing the operating margins of those companies whose inputs are highly import-oriented. The impact of higher input costs on firms’ financial statements will be seen in the upcoming earnings season.