US Dollar to Japanese Yen (USD/JPY) Exchange Rate Trending at 4-Week Low after Sales Data

The US Dollar has been enjoying a bullish relationship with the majority of its currency counterparts in recent weeks due to speculation that the Federal Reserve intends to increase borrowing costs in the first half, if not the first quarter, of the year. However, the US Dollar to Japanese Yen currency pair tumbled to a one-month low following the publication of US retail sales figures. Rate hike bets and demand for the US Dollar were undermined as US retail sales (which had been expected to fall by -0.1% on the month in December following November’s strong Black Friday gain) were shown to have dropped by -0.9%. In a knee jerk reaction to the figure, the US Dollar slid across the board. The USD/JPY exchange rate fell by 1% to 116.77 Yen per Dollar. Economist Guy Berger was fairly optimistic about the sales report; ‘It’s a weak number but it follows some really strong ones and I don’t think it changes my general feeling on how the economy and consumers are doing. Maybe the optimism a month ago got a little too heated.’

Forex strategist Vassili Serebriakov observed; ‘This weaker retail sales just puts Dollar-Yen on the back foot’ and industry expert Masato Yanagiya noted; ‘If stocks continue to slump on the idea that low oil prices will become a risk to the U.S. or the global economy, dollar-yen will continue to fall. It’ll be easy for the yen to strengthen amid a flight to quality.’ Increased demand for the safe-haven Yen also saw it advance on the Euro and Pound. Overnight Japan’s Machine Tool Orders report showed a 33.8% year-on-year increase in December, down from 36.6% in November.

The USD/JPY currency pair could experience additional fluctuations during the Asian session as Japan publishes its Machine Orders data and Domestic Corporate Goods Price Index. Investors with an interest in the US Dollar to Yen pairing will also be looking ahead to the US initial jobless and continuing claims reports.