Trade Desk Thoughts - Japanese CGPI

Japanese CGPI Actual 7.2%, Expected 7.2%, Previous 7.1%

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: Producer prices rose by 7.2 percent from the previous year in July. Wholesale inflation is expected to slow to reflect the lower crude oil prices seen recently, although it is likely to remain high for the time being. These higher costs are also eating into profit margins which leave companies with less money to spend on wages and equipment. The economy contracted last quarter due to weakening exports and capital spending, causing some economists to predict that the world’s largest economy is already in a recession.

Forex Technical Reaction: After bouncing off the 100 day SMA earlier in the day the Japanese Yen is holding just below the neutral LFB pivot point at 107.24.

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