Japan reported the overall consumer price index (CPI) for January 2012 was up 0.2% from the previous month to 99.6 and up 0.1% over the year. Yet, the core CPI which excludes volatile food costs lowered 0.1% from the year earlier resulting different than economists’ projections of a 0.2% decrease. The decrease occurred due to lowering costs in household appliances although utility pricing including oil saw increases. Deflation is correlated with decreased spending as consumers wait for lower prices before making purchasing items. This behavior weakens demand, negatively impacting producers. Unfortunately, deflation has been a long-time struggle within the country and analysts predict the dilemma will not be resolved in the near future. The Bank of Japan committed to taking additional monetary easing measures until the country achieves its 1.0% increase pricing goal.
The Ministry of Internal Affairs and Communication in Japan reported Friday expenditures for two or more individual households decreased by a seasonally adjusted 2.3% (2.1% nominally) to ¥283,118 from the previous year. The rate was higher than analysts forecasted at 0.9% as December experienced a 0.5% gain. Furthermore, household expenditures that included all households came to a ¥309,483 average, lowering the trend 2.8% from the previous year. In addition to this, unemployment in the country increased 0.1% from the revised 4.5% December 2011 figure to 4.6% in January 2012.
The Japanese Yen has been steadily weakening since the beginning of February. The USDJPY has climbed from lows of 76.00 and traded as high as 81.60. For now the resistance at 81.60 holds as the pair has failed to break that level twice. If the pair closes above 82.00 and risk appetite increases, we expect the pair to target 85.00, which was the high established on April 6th, 2011.
Eugene Ross, Analyst
At any use of the analytical material taken from a site of company Admiral Markets, and the secondary publication on any other resources, the rights to intellectual property for a dealing center «Admiral Markets», the reference to a company site is obligatory.