Intraday Market Thoughts

Onto Japan CPI & VAT Impact

by Adam Button
Apr 25, 2014 0:03

An upbeat report on US durable goods orders offers fresh ammunition for the US dollar bulls. It was a choppy day over all with JPY leading and AUD lagging. Japanese CPI is the highlight in the hours ahead. In today's new set of Premium Insights, a new CADJPY trade was issued following yesterday's USDJPY trade. These are in in addition to EURUSD, GBPUSD, USDCAD, USDCHF, AUDNZD and the gold long which are all in progress.

US durable goods orders rose 2.6% compared with 2.0% expected in a sign of improving demand. It's not the kind of report that points to +3% growth but it's a start. Core orders rose 2.2% compared to 1.5% and the prior number was revised slightly higher.

The US dollar rose to the highs of the day after the report. USD/JPY climbed to 102.64 and EUR/USD fell to 1.3792.The moves were short-lived, in part because initial jobless claims missed the 315K consensus at 329K. Easter was most likely the reason behind the miss. Risk trades stumbled on news and rumors out of Ukraine as troops attacked separatists and Russia vowed a reaction.

The major report due in the coming hours comes from Japan with CPI on the docket at 2330 GMT. March national inflation is expected up 1.6% but only 0.7% ex-food and energy. More real-time April data for Tokyo is expected to show CPI up 3.0% y/y.Traders raised eyebrows this week after reports that the BOJ could hike its inflation forecasts next week. A high reading combined with that chatter could undercut yen crosses. The forecasts are due April 30.

Act Exp Prev GMT
National CPI (MAR) (y/y)
1.5% Apr 24 23:30
National CPI Ex Food, Energy (MAR) (y/y)
0.8% Apr 24 23:30
National CPI Ex-Fresh Food (MAR) (y/y)
1.4% 1.3% Apr 24 23:30
Tokyo CPI (MAR) (y/y)
1.3% Apr 24 23:30
Tokyo CPI ex Food, Energy (MAR) (y/y)
0.4% Apr 24 23:30
Tokyo CPI ex Fresh Food (MAR) (y/y)
2.8% 1.0% Apr 24 23:30
Durable Goods Orders (m/m)
2.6% 2.0% 2.1% Apr 24 12:30
Continuing Jobless Claims
2,680K 2,750K 2,741K Apr 24 12:30
Initial Jobless Claims
329K 310K 305K Apr 24 12:30
Jobless Claims 4-Week Avg.
316.75K 312.00K Apr 24 12:30

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