The Japanese yen has posted considerable losses in the Tuesday session, USD/JPY is trading at 110.29, up 0.58% on the day. On the release front, Japanese Tertiary Industry Activity declined 0.3%, missing the estimate of -0.2%. This marked the third decline in four months. In the US, the focus is on consumer spending reports. Retail Sales dipped to 0.3%, shy of the estimate of 0.4%. Core Retail Sales edged up to 0.3%, but missed the forecast of 0.5%. On Wednesday, the US will release Housing Starts and Building Permits.
Retail sales reports were shy of the estimates in April, but investors preferred to focus on the positive, noting that both retail sales and core retail sales posted gains, as consumer spending is improving after a sluggish first quarter. A new concern is higher gas prices, which could put a dent in consumers’ wallets and hurt spending. Oil prices have hit their highest levels in over 3 years, and with the US leaving the Iran nuclear deal and escalating tensions in the Middle East, gasoline prices could remain at high levels.
Has the impressive streak come to an end? Japan has boasted eight consecutive quarters of economic growth, but the first quarter appears likely to buck the trend. The economy is expected to show no growth in Q1, compared to strong growth of 1.6% in the fourth quarter. The expected slowdown is being attributed to weak consumer spending and softer global demand for Japanese exports. Still, analysts are viewing the Q1 report card as a temporary blip, with second-quarter expected to rebound with annualized growth of 1.0%.
