The Canadian dollar remained range-bound against the yen following the release of weak economic data from both Canada and Japan. While Japan’s housing starts plunged in March, Canada’s GDP growth data for February missed estimates. Overall, the CAD/JPY pair traded in a range of between 114.26 and 114.69 in the past 24 hours.
According to Japan’s Statistics Bureau, the country’s unemployment rate was 2.60% in March, unchanged from the previous month, but a notch higher than forecasts of 2.50%. The reported figure reflects the highest level since September 2023.
The number of jobless people stood almost unaltered at 1.82 million. Employment declined by 230,000 to 67.60 million. The labor force declined by 250,000 to 69.41 million. Those who are not part of the labor force rose by 310,000 to 40.59 million. Additionally, the labor force participation rate grew to 62.80% in March 2024 from 62.60% in March 2023.
In the meantime, the jobs-to-applications ratio inched up to 1.28 in March, reflecting the highest level since October 2023, from the earlier level of 1.26.
According to the preliminary data published by Japan’s Ministry of Economy, Trade, and Industry (METI), the country’s industrial production grew by 3.80% m-o-m in March following a 0.60% decline in the previous month, surpassing forecasts of 3.40% growth.
The reported figure reflects the sharpest increase since June 2022. The increase was led by a 9.60% jump in production of motor vehicles in March, following an 8.10% decline in February. Production machinery surged 11.60% in March. Likewise, electronic parts and devices grew by 9.20%. On a y-o-y basis, Japan’s industrial output declined by 6.70% in March 2024, reflecting the fifth successive month of contraction and the sharpest rate since September 2020.
In a separate news release, the METI stated that Japan’s retail sales grew by 1.20% y-o-y in March 2024, following a 4.70% increase in the previous month, missing forecasts of 2.50% growth.
The reported figure reflects the 25th successive monthly growth in retail sales as consumption in Japan persisted on a healthy basis. Machinery and equipment retail sales surged 8.10% in March. Department stores and food & beverage grew by 6.10% and 4.60%, respectively. Also, pharmaceuticals and cosmetics increased 3.90% in March. On the contrary, automobile sales fell by 15.90% y-o-y in March 2024. Similarly, textiles, clothing, and personal goods decreased by 3.80%.
On a m-o-m basis, retail sales dipped 1.20% in March. This follows a 1.50% growth in February.
According to Japan’s Ministry of Land, Infrastructure, Transport, and Tourism (MILT), the country’s housing starts plunged 12.80% y-o-y in March following an 8.20% decline in the previous month, missing forecasts of a 7.60% decrease. The reported figure reflects the 10th successive month of decline and the steepest decrease since June 2020.
According to Statistics Canada, the country’s economy expanded 0.20% m-o-m in February following a 0.50% GDP growth in the previous month, missing forecasts of a 0.30% increase.
With 0.20% growth, services-producing industries led the increase for the second month in a row. The goods-producing industries did not record any notable changes. This is because the growth of the mining, quarrying, and oil and gas extraction sectors was negated by the utilities and manufacturing sectors. Specifically, the mining, quarrying, and oil and gas extraction sectors posted an increase of 2.50% in February. This is the fourth month of growth in five months. However, the utility sector contracted 2.60% m-o-m in February.
Overall, 12 out of 20 sectors recorded growth in the month.
The transportation and warehousing sector posted growth of 1.40% in February, reflecting the largest monthly growth rate since January 2023, as six out of nine subsectors posted an increase.
The public sector inched up 0.20% m-o-m in February, following a 1.90% rise in January. On the contrary, the manufacturing sector posted a 0.40% contraction in February, led by a decrease in transportation equipment, manufacturing, and chemical product manufacturing.
The finance and insurance sectors posted 0.30% growth in February, reflecting the third successive monthly increase.
As per the advance estimate released by Statistics Canada, the country’s economy did not undergo any notable change in March. Including this advance estimate, the available data indicates that Canada’s GDP grew 0.60% in the March quarter of 2024.
The weak economic data is expected to keep the CAD/JPY pair range-bound in the short term.
The historical price chart indicates that the CAD/JPY is ascending after testing the support at 113.15. The next resistance is anticipated to be only near 117.30. Additionally, the currency pair is trading above its 50-day moving average, while the stochastics indicator is near the oversold region. Therefore, we anticipate the CAD/JPY pair to remain in an uptrend for the next few trading sessions.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
