Japan's Economy Contracts in First Quarter, Will USD/JPY Rise? Analysts: Could Fall Below 152
Summary: The U.S. announces the slowest core CPI increase in three years, with retail sales remaining stagnant. This leads investors to anticipate an earlier interest rate cut by Fed, causing the dollar to fall to multi-month lows. Short-term attention for USD/JPY focuses on the 50-day moving average near 152.85 for support. If this level is breached, further testing around the support near the April 10th low of 151.68 may occur.
During the Asian session on Thursday (May 16th), the USD/JPY fluctuated weaker, hitting a new one-week low near 153.60. CPI data reinforced expectations of a Fed rate cut in September, dragging down the dollar and subsequently pushing the USD/JPY lower. Latest data indicates a contraction in the Japan's economy in the first quarter, prompting JPY bears to buy the USD/JPY on dips. However, some analysts believe that the USD/JPY may further decline towards 151.68 in the near future.
The outlook for theJPY remains uncertain. Earlier data released on the same day showed a larger-than-expected contraction in Japan's economy in the first quarter, posing new challenges to policymakers as the Bank of Japan considers raising interest rates. The data reveals that Japan's GDP contracted by 2.0% on a QoQ annualized basis from January to March, exceeding analysts' estimates of a 1.5% decline. The first quarter GDP fell by 0.5% compared to the previous quarter, with analysts expecting a 0.4% decline. Private consumption, which accounts for over half of the economy, fell by 0.7% compared to the previous quarter, against expectations of a 0.2% decrease. This marks the fourth consecutive quarter of decline, the longest since 2009.
Summary: The U.S. announces the slowest core CPI increase in three years, with retail sales remaining stagnant. This leads investors to anticipate an earlier interest rate cut by Fed, causing the dollar to fall to multi-month lows. Short-term attention for USD/JPY focuses on the 50-day moving average near 152.85 for support. If this level is breached, further testing around the support near the April 10th low of 151.68 may occur.
During the Asian session on Thursday (May 16th), the USD/JPY fluctuated weaker, hitting a new one-week low near 153.60. CPI data reinforced expectations of a Fed rate cut in September, dragging down the dollar and subsequently pushing the USD/JPY lower. Latest data indicates a contraction in the Japan's economy in the first quarter, prompting JPY bears to buy the USD/JPY on dips. However, some analysts believe that the USD/JPY may further decline towards 151.68 in the near future.
The outlook for theJPY remains uncertain. Earlier data released on the same day showed a larger-than-expected contraction in Japan's economy in the first quarter, posing new challenges to policymakers as the Bank of Japan considers raising interest rates. The data reveals that Japan's GDP contracted by 2.0% on a QoQ annualized basis from January to March, exceeding analysts' estimates of a 1.5% decline. The first quarter GDP fell by 0.5% compared to the previous quarter, with analysts expecting a 0.4% decline. Private consumption, which accounts for over half of the economy, fell by 0.7% compared to the previous quarter, against expectations of a 0.2% decrease. This marks the fourth consecutive quarter of decline, the longest since 2009.
