The greenback weakened against the yen yesterday following the release of lower-than-anticipated retail sales data for June. The decline was also fueled by better-than-expected Japan’s tertiary industry activity data for May. Overall, the USD/JPY pair declined from a high of 138.90 to a low of 137.68 in the past 24 hours.
According to Japan’s Ministry of Economy, Trade, and Industry, the country’s tertiary industry activity rose by 1.20% m-o-m in May, following a 0.90% rise in the previous month and exceeding forecasts of 0.40% growth.
Correspondingly, Japan’s tertiary industry activity index increased to 102 in May from 100.80 in the earlier month.
The broad-ranging personal services index rose by 0.50% m-o-m to 101.50. Likewise, the broad-ranging business services index lost 0.30% m-o-m to 100.30.
The overall increase was led by a 7.60% rise in living and amusement-related services, a 5.40% rise in medical, health care, and welfare, a 1.70% growth in finance and insurance, and a 0.90% rise in retail trade.
The increase was partly negated by a 4.50% decline in transport and postal activities, a 1.60% decrease in information and communications, and a 0.30% drop in wholesale trade.
According to the US Census Bureau, the country’s retail sales inched up 0.20% m-o-m in June following a 0.50% increase in the previous month but missed forecasts of a 0.50% growth.
Miscellaneous store retailers grew by 2% m-o-m in June. Likewise, non-store retailers rose by 1.90%. While furniture sales increased by 1.40%, electronics, and appliances sales inched up by 1.10%. Clothing grew by 0.60%.
On the contrary, gasoline stations recorded a 1.40% decline in sales. Building materials and garden equipment sales fell by 1.20%. Sporting goods, hobby, musical, and book sales decreased by 1%. While food and beverage stores posted a decrease of 0.70%, health, and personal care stores inched down 0.10%.
Excluding automobiles, gasoline, building materials, and food services, core retail sales inched up 0.60%.
According to the data published by the US Federal Reserve, the country’s industrial production declined 0.50% m-o-m in June, following a decrease of 0.20% in May and worse than the no change anticipated by economists.
The report indicates the second successive monthly decrease. Notably, industrial production rose by 0.70% in 2Q 2023. Manufacturing output inched down 0.30% in June but grew by 1.50% in the second quarter. Furthermore, the mining and utilities indexes declined 0.20% and 2.60%, respectively, in June.
The Federal Reserve also stated that the US capacity utilization rate inched down to 78.90% in June from 79.40% in May and missed forecasts of 79.50%.
The weak US economic data is expected to keep the USD/JPY pair range-bound with a slight bearish bias in the short term.
The historical price chart indicates that the USD/JPY pair is descending after failing to break the resistance at 138.90. The next support is anticipated to be near 135. Additionally, the currency pair is trading below its 50-day moving average, while the RSI indicator is showing a reading below 50. Therefore, we anticipate the USD/JPY pair to remain in a downtrend in the near 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.
