The EUR/JPY cross continues its downward trajectory for the third consecutive day, hovering around 169.78 during the early European session on Friday. The cross remains under selling pressure, exacerbated by disappointing German Retail Sales figures. Attention now turns to the first reading of the Eurozone Harmonized Index of Consumer Prices (HICP) for May, scheduled for release later in the day.
Weak German Retail Sales Data
According to Destatis, German Retail Sales for April 2024 fell short of expectations. Retail Sales in Germany experienced a 1.2% month-on-month decline in April, contrasting with a 1.8% increase recorded in March. Annually, Retail Sales plummeted by 0.6% in April, following a 1.9% decline in March. Despite the downbeat data, the Euro (EUR) exhibited minimal reaction.
ECB Policy Expectations
Traders are scaling back their expectations of the European Central Bank (ECB) initiating policy easing ahead of other major central banks. Market sentiment suggests that the ECB may require additional time to thoroughly assess inflation data. The annual Harmonized Index of Consumer Prices (HICP) is anticipated to rise by 2.5%, compared to the previous reading of 2.4%, with the core HICP forecasted to show a slight uptick to 2.8% from 2.7% in April.
Japanese Yen Dynamics
Japanese Finance Minister Shunichi Suzuki indicated on Friday that he closely monitors foreign exchange (FX) movements and is prepared to implement measures if deemed necessary. Such verbal intervention is likely to bolster the Japanese Yen (JPY) in the short term and potentially limit upside momentum for the EUR/JPY cross.
Tokyo Consumer Price Index (CPI) Data
Inflation data from Tokyo reveals a 2.2% year-on-year increase in May for the Consumer Price Index (CPI), up from 1.8% in April. Additionally, the core CPI in Tokyo rose to 1.9% in May, aligning with market expectations and marking a slight increase from 1.6% in April. These figures contribute to uncertainties surrounding the timing of the Bank of Japan‘s (BoJ) next interest rate adjustment.
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