Weak Japan CPI Sends Nikkei Higher, Yen Lower
ActionForex | Nov 28, 2014 01:03AM ET
Nikkei 225 rises in Asian session after a batch of mixed Japanese data while the yen is mildly lower. National CPI core slowed for the third straight month to 2.9% yoy in October, as expected. Adjusted for the April sales tax hike, national CPI core slowed to 0.9% yoy, moved further away from BoJ's target of 2%, and was below 1% level for the first time in a year. Tokyo CPI core slowed to 2.4% yoy in November as expected. The set of data affirmed economists' scepticism that BoJ could achieve the inflation target in the fiscal year 2015 and the central bank could be forced to take extra measures. Also released from Japan, retail sales rose 1.4% yoy in October versus expectation of 1.5% yoy. Household spending dropped -4.0% yoy versus expectation of -5.0% yoy. Unemployment rate dropped to 3.5% versus expectation of being unchanged at 3.6%. Industrial production rose 0.2% mom versus expectation of -0.5% mom.
Released from New Zealand, building permits rose 8.8% mom in October, NBNZ business confidence improved to 31.5 in November. The Kiwi clearly outperforms the Aussie this week. AUD/NZD dips to as low as 1.0819 so far. The break of 1.0923 support suggests that corrective rebound from 1.0489 has completed at 1.1303 already, well below 38.2% retracement of 1.3793 to 1.0489. Weekly MACD is also trending down below signal line. Near term outlook is bearish for a test on 1.0489 support, or even further to 2005 low of 1.0432.
Looking ahead, Eurozone CPI will be a major focus in European session and is expected to slow further to 0.3% yoy. Eurozone will also release unemployment rate. German will release retail sales. Swiss will release KOF leading indicator while UK will release nationwide house price. In US session, Canada will release GDP, IPPI and RMPI.
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