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  • The USD/JPY pair trades near 110.50 during early Friday.
  • Weaker than expected US retail sales and downbeat news from the US-China trade talks negatively affected the pair on Thursday.
  • Traders now await Japan’s monthly revised industrial production data.

The Japanese Yen (JPY) remains little changed around 110.50 at the start of the Asian trading session on Friday. The USD/JPY pair declined for the first time in a week on Thursday after a surprise drop in the US retails sales dragged the USD down. Adding to the pair’s weakness was also the news of differences between the US and China at the trade talks that renewed risk aversion and strengthened the JPY. Traders may now look for Japan’s revised industrial production for immediate direction.

January month US retails sales data was a disappointment to the USD traders. The headline retail sales growth shrank -1.2% versus +0.1% forecast on a monthly basis whereas core retail sales m/m dropped to -1.8% against 0.0% market consensus and revised prior.

While retail sales were a drag on the USD/JPY pair, a news report from South China Morning Post that the US and China remain far apart on issues like equal market access and intellectual property protection negatively affected investors’ appetite for risk and favored the safe-haven currency JPY.

Next up in the market players’ radar will be a monthly reading of revised industrial production from Japan, at 01:30 GMT. The December month data is expected to confirm the initial flash estimation of -0.1% contraction into the industrial activity of the nation.

In addition to the Japanese industrial production, developments at the US-China trade front will also be closely observed. Both the parties will meet today for one more time to discuss the trade issues before the US delegates head back to home.

USD/JPY Technical Analysis

The USD/JPY pair still trades above 50-day simple moving average (SMA) figure of 110.25 and can again challenge the 111.00, followed by 200-day SMA level of 111.30 unless it trades beyond 110.25 on a daily closing basis.

Should the quote drops under 110.25, 110.00, 109.80 and 109.50 are likely following supports to appear on the chart.