USD/JPY has shown little movement since late last week, and this trend has continued in the Wednesday session. In North American trade, USD/JPY is trading at 113.31, up 0.06%. On the release front, Japanese Housing Starts declined 0.4%, a much better reading than the forecast of -2.5%. Later in the day, Japan releases manufacturing and consumer spending reports. Preliminary Industrial Production is forecast to remain unchanged at 0.5%, while Retail Sales is expected to rebound with a strong gain of 1.1%.
In the U.S, key indicators were mixed on Wednesday. CB Consumer Confidence slowed to 122.2, well off the estimate of 128.2 points. Pending Home Sales posted a small gain of 0.2%, beating the estimate of -0.4%. Housing numbers continue to beat expectations. Last week, Housing Starts came in at 1.30 million, beating the forecast of 1.25 million. On Tuesday, New Home Sales sparkled, with a gain of 733 thousand. This easily beat the estimate of 654 thousand, and was the highest reading since September 2007. On Thursday, the US releases unemployment claims, which is expected to drop to 241 thousand.
Japan released consumer spending and inflation numbers on Monday, and the readings were strong. Tokyo Core CPI, the primary gauge of consumer inflation, climbed 0.9%, in December its strongest gain since March 2015. This edged above the forecast of 0.8%. National Core CPI improved to 0.9%, just above the estimate of 0.8%. There was more positive news as Household Spending rebounded with an excellent gain of 1.7%, crushing the estimate of 0.6%. This reading marked a 5-month high. Next up is another inflation indicator, BoJ Core Inflation. The Bank of Japan maintained monetary policy last week and the minutes of the October meeting indicated that most members favored a continuation of the current ultra-accommodative policy. This could weigh on the yen, as other central banks, such as the ECB, the Federal Reserve and the Bank of Canada have tightened policy in recent months, widening divergence with the Bank of Japan.
