The US Dollar gaining broad strength helped to send the Japanese Yen to a 10-month trough during London trade on Thursday. News from Japan that the economy is in recession is also keeping the currency under pressure, as is a general improvement in global risk appetite. Earlier in the week, the Japanese Cabinet Office reported that preliminary 4th quarter GDP fell unexpectedly to -1.6% (on a quarter-over-quarter basis), far below the -0.9% that analysts had predicted; the previous reading was at 0.4%. Industrial production also slipped more than anticipated with December’s figures at -3.1% on a year-over-year basis against an expected flat reading of -3%. Japanese inflation data is due out later today and analysts are calling for a decline to 0.7% from 0.8% (year-over-year).
As of 11:04 am in London trading, the USD/JPY was at 112.1010 Yen, a gain of 0.75%; the pair has ranged from a session high of 112.193 Yen to a low of 111.107 Yen. The EUR/JPY was trading at 121.005 Yen, up 0.6103% and off the earlier peak of 121.106 Yen. The GBP/JPY was higher at 144.35 Yen, a gain of 0.416%, moving away from the session high at 144.624 Yen.
An improvement in the latest retail sales figures out of the UK failed to provide any more than a temporary lift for the Pound Sterling. The Office of National Statistics earlier reported that January’s retail sales figures came in at 0.8% on an annualized basis, and 0.9% on a monthly basis, above the expected 0.7% for both. Retail sales which excluded fuel purchases was also higher on an annualized and monthly basis, at 1.2% and 1.6%, respectively, with 0.4% and 0.8% predicted. There was a knee-jerk reaction to the news which sent the GBP/USD pair to the daily high but it was unable to sustain momentum and has since slid to $1.2878, a loss of 0.3212%.