The US dollar declined against the Japanese yen yesterday following the release of lower-than-anticipated housing starts data for April. Japan’s preliminary GDP data for March 2022 quarter was not impressive but slightly better than forecast by economists. Overall, the USD/JPY pair declined from a high of 129.53 to a low of 128.10 in the past 24 hours.
According to the preliminary data published by Japan’s Cabinet Office, the country’s economy shrank 0.20% q-o-q in the March 2022 quarter, following an expansion of 0.90% (downwardly revised from 1.10%) in the prior quarter and slightly better than the 0.40% contraction forecast by economists. The reported figure reflects the second contraction in the last three quarters, against the backdrop of a revival in Covid-19 cases in addition to geopolitical issues such as the Russia-Ukraine war.
Furthermore, the preliminary GDP price index contracted 0.40% y-o-y in the March 2022 quarter, following a 1.30% decline in the earlier month. Economists had anticipated the economy to shrink by 1% y-o-y in March 2022 quarter.
For the second time in three quarters, household consumption declined 0.10% in March 2022 quarter. Also, public investment fell by 3.60%, reflecting the fifth consecutive quarter of decline. While exports grew by 1.10%, imports rose by 3.40%. In the meantime, business investment increased by 0.50%, representing the second successive increase. Government spending rose by 0.60%.
The US Census Bureau stated that building permits declined to 1.819 million units in April, from 1.879 million units in the prior month, but slightly greater than the 1.81 million units anticipated by economists.
The reported figure, however, is 3.1% higher than the 1.765 million units reported for April 2021. Single-family authorizations stood at 1.11 million units in April 2022, down 4.60% from 1.163 million units in the earlier month.
The Census Bureau also stated that housing starts were 1.724 million units in April, down 0.20% from 1.728 million units in the prior month and missed the 1.75 million units forecast by economists.
The reported figure was 14.60% higher than the 1.505 million units reported for April 2021. Single-family housing starts were 1.10 million units in April 2022, a decrease of 7.30% from 1.187 million units in the previous month.
Privately-owned housing completions were 1.295 million units in April, a decrease of 5.10% from the 1.365 million units in the earlier month, and 8.60% lower than the 1.417 million units reported for April 2021.
Single-family housing completions were 1.00 million units in April, down 4.90% from 1.053 million units in March.
The weak housing starts data is expected to keep the US dollar range-bound with a slight bearish bias against the yen in the short term.
The historical price chart indicates that the USD/JPY pair is declining after failing to break the resistance at 130.80. The next major support is anticipated only near 127.60. Additionally, the currency pair is trading below its 50-day moving average, while the stochastics indicator is in the bearish zone. Therefore, we are anticipating the currency pair to remain in a downtrend in the days ahead.
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