The US dollar rallied against the yen yesterday despite reports of a sharp rise in the wholesale inventories in February. Notably, the Japanese unemployment rate reported earlier today was slightly better-than-anticipated. However, the hawkish statement issued by the US Fed last week and anticipations of a 50-basis point rate hike in the April policy meeting continue to keep the greenback bullish against the yen. Overall, the USD/JPY pair rallied from a low of 122 to a high of 125 in the last 24 hours.
According to the US Census Bureau, the country’s goods trade deficit narrowed slightly to $106.59 billion in February, from $107.57 billion in the prior month, but missed the trade deficit of $106.40 billion anticipated by economists.
Exports increased 1.20% to $157.16 billion, lifted by a 2.60% increase in sales of industrial supplies, 3.60% rise in foods, feeds & beverages, and 6.30% growth in consumer goods.
In the meantime, imports grew by a mere 0.30% to $263.75 billion, with consumer goods increasing by 0.6%, industrial supplies by 4.40%, and capital goods by 1.50%. This was partly negated by a 9.90% decline in imports of automotive vehicles and a 3% contraction in foods, feeds & beverages.
As per the preliminary data provided by the US Census Bureau, the wholesale inventories increased 2.10% m-o-m in February, following a rise of 1.10% in the earlier month and greater than the 1.30% growth anticipated by economists.
In value terms, wholesale inventories increased to $814.80 billion in February. The reported figure was the 19th successive monthly increase, against the backdrop of a 1.70% rise in inventories of durable goods and a 2.80% increase in non-durable ones.
On a y-o-y basis, wholesale inventories surged 19.40% in February.
The recent hawkish statement from the Fed and anticipations of a 50 basis points rate hike in the April policy meeting is encouraging the market to go long on the US dollar (against major rivals, including the yen), and the scenario is expected to continue in the days ahead.
Earlier today, Japan’s Statistics Bureau stated that the unemployment rate edged downwards to 2.70% in February, from 2.80% in the prior month and a notch below the 2.80% jobless rate anticipated by economists. In February 2021, Japan’s jobless rate was 2.90%.
The count of jobless individuals fell by 30,000 to 1.88 million, while employment stood unaltered at 66.93 million. Also, the labor force participation rate was 61.80% in February. In the meantime, the jobs-to-application ratio was 1.21, reflecting a 22-month high. In January, the figure was 1.20.
The historical price chart indicates that the USD/JPY pair is ascending after testing the support at 114.60. The next major resistance is anticipated only near 131.65. Additionally, the currency pair is trading above its 50-day moving average, while the MACD indicator has a positive reading. Therefore, we anticipate the currency pair to remain in an uptrend in the short term.
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.
