The loonie remained range bound against the yen Friday following the release of upbeat economic data from both Japan and Canada. While Japan’s industrial production data for February surpassed estimates, Canada’s economic growth data for January indicates a rebound from December. Overall, the CAD/JPY pair traded in a range of between 97.93 and 98.74 in the past 24 hours.
According to Japan’s Statistics Bureau, Tokyo’s core consumer price index rose by 3.20% y-o-y in March, following a 4.30% increase (a 43-year high) in the previous month and greater than the 3.10% growth forecast by economists.
The sharp decline in March was mainly led by government subsidies for electricity charges.
Prices devoid of the effects of energy and fresh food rose by 3.40% on a y-o-y basis, reflecting the quickest rate in more than thirty years.
Notably, for the 10th successive month, Tokyo’s core inflation rate remained higher than the Bank of Japan’s target rate of 2%, reflecting higher inflationary pressures in the country.
According to the preliminary data published by Japan’s Ministry of Economy, Trade, and Industry (METI), the country’s industrial production rebounded by 4.50% m-o-m in February following a 5.30% decline in the previous month and a greater than 2.80% increase anticipated by economists. The reported figure reflects the steepest rise in industrial output since June 2022, primarily fueled by a 15.40% increase in motor vehicle production in February.
Production machinery posted a growth of 9.20%, while electronic parts and devices recorded an increase of 7.10%. On a yearly basis, industrial production declined 0.60% in February, reflecting the fourth successive month of decrease.
In a separate news release, Japan’s METI stated that the country’s unemployment rate inched up to 2.60% m-o-m in February from 2.40% in the previous month. Economists had anticipated no change in the country’s unemployment rate. This is the first decline in five months.
The job availability ratio inched lower by 0.01 points (m-o-m) in February to 1.34. This is the second decline in as many months. The ratio implies the availability of 134 job openings for every 100 job seekers.
The aggregate number of jobless people stood at 1.80 million in February, an increase of 7.80% from January.
With respect to job openings, the hotel and restaurant industry recorded the steepest rise of 37.20% y-o-y in February. The education sector recorded a rise of 23.70% in the same period. The manufacturing and construction sectors recorded increases of 0.20% and 0.30%, respectively, in February.
METI also stated that Japan’s retail sales surged 6.60% y-o-y in February, following a 5% rise in the previous month and exceeding forecasts of 5.90% growth. The reported figure reflects the 12th successive month of increase in retail trade and the steepest rate since May 2021.
Motor vehicles recorded an increase of 15.3%, while general merchandise recorded a rise of 10.3%. Fabric apparel & accessories posted a surge of 9.90%. Similarly, medicine and toiletry stores recorded an increase of 9.20%.
In the meantime, retail trade for fuel inched down by 0.20%. On a m-o-m basis, retail sales fell by 4.40% in February, reversing from a 1.90% rise in the previous month.
According to the data published by Statistics Canada, the country’s economy expanded 0.50% m-o-m in January following a 0.10% GDP contraction in the previous month and a notch greater than the 0.40% growth forecast by economists.
Goods-producing industries expanded by 0.40% in January, while services-producing industries grew by 0.60% in the same period. 17 out of 20 industrial sectors recorded growth.
Wholesale trade grew by 1.80% m-o-m in January, more than negating the decreases recorded in the earlier two months. Mining, quarrying, and oil and gas extraction grew by 1.10% in January. The manufacturing sector expanded by 0.50% in January. Likewise, the construction sector inched up 0.70%, reflecting the steepest gain since March.
Transportation and warehousing grew by 1.90% in January. Also, the accommodation and food services sector grew by 4% in January. Arts, entertainment, and recreation grew by 2.10%. Overall, the public sector expanded by 0.30% in January, an increase for the 12th consecutive month.
Advance data published by Statistics Canada indicates that the country’s economy grew by 0.30% m-o-m in February.
The upbeat economic data from both Japan and Canada is expected to keep the CAD/JPY pair range-bound in the short term.
Technically, the CAD/JPY pair is rising after consolidating at 97.85 levels. The next resistance is anticipated only near 100.20. Additionally, the currency pair is trading above its 50-day moving average, while the RSI indicator is showing a positive reading. Therefore, we anticipate the CAD/JPY pair to remain in an uptrend in the days ahead.
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.
