The Japanese yen strengthened strongly against the US dollar after retail sales data came out. Also, a report was published from the recent meeting of the Bank of Japan, in which traders tried to find any hint about changes in the monetary policy of the Central Bank.
According to the report of the statistics agency, retail sales in Japan in November this year increased by 2.2% compared to the same period last year. According to large operators, the growth of retail sales in November was seen at 1.4% compared with the same period in 2016. Growth can be attributed directly to seasonality in the pre-holiday holidays. The increase in this indicator will have an excellent effect on the overall growth of Japan's GDP at the end of this year.
Industrial production in Japan for November this year grew by 0.6% only, while many economists expected a larger increase of 0.9%. Inventories in November, on the contrary, fell to 1.0% compared with October.
Studying the report of the Bank of Japan, it is necessary to pay attention to the further course of monetary policy, which is advisable to continue similar form according to the opinion of the regulator.
The Bank of Japan also said that there is still a long way to go to achieve the target inflation rate of 2%, although, the recent consumer price index indicators were good enough, as the major target is quite far.
The regulator also pointed out that it is still too early to discuss the strategy of minimizing monetary stimulus since it is necessary to monitor the side effects of soft policy.
As for the technical picture of USD/JPY, the inability of buyers to hold the 113.55 led to a larger selling of the US dollar with a perfectly feasible goal to update the support at 112.00. The breakdown of this level opens up good prospects for the decline of 111.40 and 110.35. In case of a breakthrough of 113.55, the trading instrument is expected to return to the resistance range of 114.60, where large sellers will return to the market again.
* The presented market analysis is informative and does not constitute a guide to the transaction.