Japanese CGPI Decreases For First Time In 5 Years

Japanese CGPI Actual -0.2%, Expected 0.3%, Previous 1.1%

Release Explanation: The Domestic Corporate Goods Price Index measures prices for goods purchased by Japanese corporations. As prices for input materials and the overall cost of manufacturing products change, companies adjust retail prices accordingly. Increases in the index often precede upward movement in the CPI. If an increase in the CGPI is followed by a rise in the CPI, concerns about inflation may prompt the Bank of Japan to raise interest rates.

Trade Desk Thoughts: Domestic corporate goods prices came in lower than expected for the first time in more than five years with a reading of -0.2 percent. This is the first decline seen since December of 2003. The chief cause of this was falling commodity prices coupled with the fact that economists are predicting the worst recession in almost 50 years which may bring back deflation which plagued the country for almost 10 years.

Forex Technical Reaction: The Japanese yen has not had much of a reaction to this news release and is currently trading below the neutral LFB pivot point at 90.22.

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