USD/JPY: Dollar Firm On Strong Housing Data

 | Aug 19, 2014 10:40AM ET

The US dollar posted slight gains on Tuesday as USD/JPY trades in the high-102 range in the North American session. On the release front, US data was mixed. CPI and Core CPI posted weak gains of 0.1%, while Building Permits and Housing Starts improved in July and beat their estimates. In Japan, we'll get a look at Trade Balance later in the day. The markets are expecting a smaller deficit in the July release.

US housing numbers were sharp on Tuesday. Building Permits improved to 1.05 million, beating the estimate of 1.00 million. Housing Starts jumped to 1.09 million, easily beating the estimate of 0.97 million. Meanwhile, inflation numbers in the US remain at very low levels. On Tuesday, CPI and Core CPI, the primary gauges of consumer inflation, both posted paltry gains of 0.1%.  These weak readings come on the heels of PPI, a manufacturing inflation index, which also came in at 0.1% last month. Weak inflation is one reason why the Federal Reserve is in no rush to raise interest rates, as low inflation points to slack in the economy.

Financial leaders and central bankers from around the world will gather in Jackson Hole, Wyoming for a conference which starts on Friday. This will be Janet Yellen's first appearance as Fed chair at the conference, and will undoubtedly be the star of the show. Yellen is expected to discuss the employment market rather than monetary policy, but the markets will be listening closely for any hints as to an interest rate hike.