It remains a quiet week for USD/JPY. In Wednesday’s North American session, the pair is trading at 111.94, down 0.07% on the day. In Japan, there was a trade deficit in March of JPY 0.18 trillion, better than the estimate of JPY 0.30 trillion. Industrial production rebounded with a gain of 0.7%, well below the forecast of 1.4%. Later in the day, manufacturing PMI is expected to remain in contraction territory, with an estimate of 49.4 points. There are no major U.S. events on the schedule.

There are no major U.S events until Thursday, when we’ll get a look at retail sales reports. February data was disappointing, as both retail sales and core retails recorded declines. This pointed to weak consumer spending, and sent the greenback lower. However, the markets are expecting much better news for March, with retail sales expected in at 0.9% and core retail sales at 0.7%. If the actual figures are within expectations, the U.S. dollar could respond with gains.

The global trade war has hurt the Japanese export sector, which is highly dependent on trade with the U.S. and China. This has also taken a heavy toll on the manufacturing sector, which has shown declines in recent months. There are reports of significant progress in trade talks between the U.S. and China, but last week, a senior U.S. official said that an agreement could be months away.

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With the Japanese economy feeling the squeeze of the U.S.-China trade war and the BoJ offering negative interest rates, there isn’t much to attract investors to the yen unless risk appetite drops sharply. At the same time, any progress between the sides would be good news for the Japanese economy.

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