The Japanese yen has posted losses in the Tuesday session. In the North American session, USD/JPY is trading at 112.68, up 0.35% on the day. There are no Japanese events on the schedule. In the U.S, Industrial Production rebounded in June with a gain of 0.6%, after a decline of 0.1% in May. Later in the day, the U.S releases a housing report. All eyes are on Jerome Powell, as the Federal Reserve chair testifies before the Senate Banking Committee.
After a soft first quarter, U.S retail sales reports have rebounded in the second quarter. Core retail sales were revised upwards to 0.8% in May, and the June gain of 0.5% edged above the forecast of 0.4%. Retail sales gained 0.4%, and were up an impressive 6.6% on an annualized basis. Consumer spending is a key driver of economic growth, and a tight labor markets and firming inflation are further indications that the economy is in excellent shape. The Fed is widely expected to raise rates again at the September meeting, with odds of a quarter-point hike at 87%, according to the CME Group.
With trade war winds getting stronger every week, Japan and the EU signed a free trade agreement on Tuesday. Japanese At the signing ceremony, Prime Minister Shinzo Abe and European Council head Donald Tusk said that the deal is a response to growing concerns about protectionism. The agreement reduces tariffs on Japanese car imports and on a range of European food products. No less important, the agreement marks the largest free trade agreement in the world, as the EU and Japan cover about one-third of global GDP.
