Japan Retail Weak, Aggressive Monetary Action Still Key

THE TAKEAWAY: Japan retail numbers point to weakening consumer consumption > BOJ’s Kuroda appears ready to take aggressive monetary policy > JPY Outlook Bearish

Japan retail data, released on late Wednesday, came in mixed with retail trade (MoM) (FEB) surpassing estimates at 1.6% versus 0.5% while trade (YoY) fell below expectations at -2.3% versus -1.8%. Meanwhile Large Retailers’ Sales also declined in February by -3.7% versus estimates of -1.5%. The dollar steadily gained against the yen following the data release before retreating to near pre-date release levels.

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Comments made by the Bank of Japan’s new chief Haruhiko Kuroda have given the yen some legs in recent weeks, specifically when he has sounded bullish about Japan’s economy. Kuroda has also made it clear, however, that asset buying itself may not be enough to get Japan out of its long standing economic malaise. This latest round of overall weak consumer data may add to this sentiment and provides more fuel for Yen bulls who anticipate Japan following through with the aggressive monetary policies they have outlined for the future.

USD/JPY (2 Hour Chart)

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Japan Retail Weak, Aggressive Monetary Action Still Key