The euro remained range bound against the yen yesterday following the release of mixed economic data from Japan and the Eurozone. While the Japanese household spending data for September missed estimates, the Eurozone retail sales declined on a y-o-y basis in the same period. Overall, the EUR/JPY pair traded in a narrow range of between 146.32 and 146.90 in the past 24 hours.
According to the Japanese Statistics Bureau, the country’s household spending grew by 2.30% y-o-y in September, following a rise of 5.10% in the prior month, but a few notches below the economist estimate of 2.60%. On a m-o-m basis, spending grew by 1.80%, reflecting the first increase in three months and slightly above the consensus of 1.70%.
The reported figure reflects the fourth successive increase in a row as people spent cash on travel following the lifting of COVID-19-related prohibitions. During the same period, real wages declined 1.30% y-o-y in September, reflecting the sixth successive monthly decline.
Spending on clothing increased by 7.30% in September, following an 8.10% rise in August. Transport recorded a growth of 8.80%, compared with 11.60%. Likewise, culture & recreation posted a surge of 12.60%, following an increase of 20.60%. Furthermore, expenditure declined by 5.60% in September, following a rise of 2.50% in August. Medical care posted a drop of 1.20%, following a jump of 15.10%. Fuel, light, and water charges recorded an increase of 1.60%, following a decline of 3.10%. Also, consumption of food increased by 1.20% compared with 0.90%. Similarly, spending on furniture surged 14.30% in September, following a decrease of 10.80%.
As per data published by Japan’s Ministry of Health, Labour, and Welfare, the country’s average cash earnings rose by 2.10% y-o-y in September, following a rise of 1.70% in the prior month. Economists did not anticipate any change in the August data.
Japan’s core consumer inflation surpassed 3% in September, reflecting the steepest rise in more than 31 years. Prime Minister Fumio Kishida recently unveiled a ¥29.10 trillion package in October to reduce the impact of increasing prices, such as utility bills, and propel wage growth. The Organization for Economic Cooperation and Development recently slashed Japan’s GDP growth rate outlook to 1.40% for 2023 from a prior outlook of 1.80%.
In the Eurozone, the French trade deficit widened to €17.50 billion in September, from €15.30 billion in the prior month, disappointing economists who were expecting a narrowing of the trade deficit to €14.70 billion.
According to Italy’s National Institute of Statistics (ISTAT), the country’s retail sales rose by 0.5% m-o-m in September, following a 0.40% decline in the prior month, and more than twice the 0.2% growth anticipated by economists.
In the quarter that ended September 2022, retail sales increased by 1.20% while the volume of sales fell by 0.50%, compared with the prior three-month period.
On a y-o-y basis, retail sales (value) jumped 4.10% in September 2022, reflecting the 19th successive monthly rise. However, volume fell by 2.70% in the same period.
Also, on a y-o-y basis, online sales grew by 3.80% in September 2022. Cosmetic and toiletry articles recorded the largest increase in sales, at 5.30%y-o-y in September 2022. Likewise, tool sales surged by 5.20%. However, audio-video equipment posted a decline of 7.20%.
According to the data published by Eurostat, Eurozone retail sales increased 0.4% m-o-m in September, following a 0.30% decline in the prior month, and in line with economists’ estimates.
The rise was led by a 1% increase in the retail trade volume of non-food products and a 0.40% growth in food, drinks, and tobacco. However, automotive fuels posted a drop of 0.60%.
On a y-o-y basis, Eurozone retail sales fell by 0.60% in September. The decline was led by a 2.40% drop in the retail trade volume of food, drinks, and tobacco. Non-food products posted a decrease of 0.30%. Automotive fuels posted an increase of 3.70%.
The weak economic data from both Europe and Japan is expected to keep the EUR/JPY pair range bound in the short term.
The historical price chart indicates that the EUR/JPY pair is declining after facing resistance at 147.30. The next support is anticipated only near 143.50. Additionally, the currency pair is trading below its 50-day moving average while the stochastic indicator is descending toward the bearish zone. Therefore, we anticipate the EUR/JPY pair to remain in a downtrend in the days ahead.
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