Retail Sales data mixed ; USD/JPY continues higher

Can the consumer save the economy? If today’s July Retail Sales data is any gauge, it seems possible! The headline Retail Sales print for July was 0% MoM vs an expectation of +0.1% MoM and a lower revised prior reading of +0.8% MoM. However, when digging a bit deeper into the details, the headline number doesn’t seem quite so bad. When removing autos from the equation, the print was +0.4% MoM vs -0.1% MoM expected and a lower revised reading of +0.9% MoM. When removing autos and gas from the headline number, Retail Sales was much stronger than expected at +0.7% MoM vs an expectation of -0.1% MoM and +0.7% MoM in June. This shows that most of the negativity in the headline print was due to poor spending in autos and gas. Sales at non-store retailers, building materials, and electronics stores increased.

What are economic indicators?

The USD/JPY has been moving higher throughout the night and continued moving in the same direction after the Retails Sales print. On a daily timeframe, the pair began moving aggressively higher on March 11^th after the pair broke above horizontal resistance at 116.35. USD/JPY traded to 131.33 on May 9^th, before pulling back in a descending wedge formation as the RSI was in overbought territory. The pair retraced to the 50% level from the lows of March 31^st to the highs of May 9^th near 126.36. Price then broke out above the top downward sloping trendline of the wedge a few days later, on March 31^st. It was off to the races again for the pair, which reached its highest level since 1998 at 139.91 on July 14^th. The pair then pulled back once again in a descending wedge formation as the RSI was in overbought territory. This time, USD/JPY pulled back to the 61.8% Fibonacci retracement level (as opposed to the 50% retracement level in the first descending wedge) and posted a false breakdown below the bottom trendline of the wedge. The pair moved back into the wedge, and today, broke out above the top downward sloping trendline. Could the pair be off to the races once again?

Source: Tradingview. Stone X

Trade USD/JPY now: Login or Open a new account!

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore

On a 240-minute timeframe, if the USD/JPY is to continue to move higher, it must first pass through horizontal resistance at 135.57. Just above there is the 61.8% Fibonacci retracement level from the July 14^th highs to the August 2^nd lows near 136.00. The next level of horizontal resistance below the July 14^th highs is at 137.38. If the near-term resistance holds, the first support level is at the top downward sloping trendline of the wedge and today’s lows at 133.90. Below there, the next support level is the bottom trendline of the wedge near 132.56, then the August 11^th lows at 132.71.

Source: Tradingview. Stone X

The July headline Retail Sales print was slightly weaker; however, the core print was stronger. Due to the mixed data, USD/JPY continued its overnight path higher as price broke out of a descending wedge. Are new 24-year highs ahead? With high inflation and negative US growth, it may depend on the ability of the consumer to hold up the economy!

Learn more about forex trading opportunities.

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.