The USD remained range-bound against the yen on Friday following the release of mixed economic data from both Japan and the US. While the US trade deficit increased unexpectedly, Japan’s unemployment rate rose out of the blue. Overall, the USD/JPY pair traded in a narrow range of 151.16 to 151.46 in the past 24 hours.
According to Japan’s Statistics Bureau, the country’s unemployment rate grew to 2.60% in February from 2.40% in the previous month. Economists had anticipated no change in the jobless rate. The reported figure reflects the first increase in seven months against the backdrop of a rise in the number of people entering the job market and an increase in the cost of living.
The number of unemployed individuals rose by 120,000 to 1.82 million. Likewise, employment rose by 220,000 to 67.83 million. The labor force grew by 310,000 to 69.66 million. On the contrary, the number of individuals detached from the labor force declined by 240,000 to 40.28 million.
The labor force participation rate increased to 62.80% in February from 62.10% in the similar period last year. The jobs-to-applicants ratio inched lower by 0.01 points to 1.26 in February, reflecting the lowest level since May 2022.
According to the preliminary data published by Japan’s Ministry of Economy, Trade, and Industry (METI), the country’s industrial production inched lower by 0.10% in February, following a 6.70% contraction in the previous month. Economists had anticipated Japan’s industrial production to grow by 1.40% in the reported period.
The decline was led by a 7.90% decrease in the production of motor vehicles. Likewise, production machinery posted a contraction of 3.20% m-o-m in February. Transport equipment, excluding motor vehicles, recorded a decrease of 8.30% in the same period.
On a y-o-y basis, Japan’s industrial production declined by 3.40% in February 2024, reflecting the fourth successive month of contraction.
In a separate news release, the Ministry of Economy, Trade, and Industry (METI) stated that the country’s retail sales grew by 4.60% y-o-y in February, following an increase of 2.10% in the previous month and greater than forecasts of a 2.80% rise.
The reported figure reflects the 24th successive month of expansion. Retail products recorded sales growth of 12.30% y-o-y in February. Pharmaceuticals and cosmetics posted an increase of 12%. Likewise, department stores and non-store retailers reported a rise of 8.60% and 8.40%, respectively. Food and beverage posted an increase of 5.70% y-o-y in February. Machinery & equipment grew by 5.40%, while fuel products posted a rise of 2.30%.
On an m-o-m basis, retail sales rose by 1.50% in February. This compares with 0.20% growth in January.
According to Japan’s Ministry of Land, Infrastructure, Transport, and Tourism (MLIT), the country’s housing starts fell by 8.20% y-o-y in February, following a 7.50% decline in the previous month and worse than forecasts of a 5.50% decrease. The reported figure reflects the ninth successive monthly decline and the steepest fall since November 2023.
According to the data published by the Census Bureau, the US goods trade deficit widened to $91.80 billion in February from $90.50 billion in January, which disappointed economists’ who were expecting a narrowing of the trade deficit to $90.10 billion.
Goods exports were $175.1 billion in February, an increase of $4.8 billion from January. Goods imports were $266.9 billion in February, up $6.1 billion from the previous month.
The preliminary data published by the Census Bureau also indicated that wholesale inventories inched up 0.50% m-o-m in February to $901.10 billion, following a decline of 0.20% in the previous month and higher than forecasts of a 0.20% increase.
The US wholesale inventories fell by 1.60% y-o-y in February 2024.
The mixed economic data is expected to keep the USD/JPY pair range-bound in the near term.
Technically, the USD/JPY pair is facing resistance at 151.85. The next major support is anticipated to be only near 150.30. Additionally, the currency pair is trading below its 50-day moving average, while the stochastics indicator is making zig-zag movement near the bearish zone. Therefore, we anticipate the USD/JPY pair to exhibit a narrow range-bound movement with a slight bearish bias 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.
