- EUR/JPY loses ground to near 171.45 in Friday’s early European session.
- German Retail Sales rose 1.9% YoY in July, weaker than expected.
- Tokyo’s August CPI inflation report keeps alive expectations for further BoJ rate hikes.
The EUR/JPY cross loses momentum to around 171.45 during the early European session on Friday. The Euro (EUR) weakens against the Japanese Yen (JPY) after the downbeat German Retail Sales data. The attention will shift to the preliminary reading of Germany’s August Consumer Price Index (CPI), which is due later on Friday. Also, the European Central Bank’s (ECB) Luis de Guindos is scheduled to speak.
Data released by Destatis on Friday showed that German Retail Sales fell 1.5% month-over-month in July, compared to a 1.0% rise in June. This figure came in below the market consensus of -0.4%. On an annual basis, Retail Sales increased 1.9% in July versus a rise of 4.9% prior, below the market consensus of 2.6%. The EUR remains weak in an immediate reaction to the weaker-than-expected German Retail Sales data.
The Japanese Yen receives support from Tokyo’s CPI inflation report for August. Tokyo’s headline CPI rose 2.6% year-on-year in August, compared to 2.9% in July. This registered the third consecutive month of moderation in Tokyo inflation rate, which remains above the Bank of Japan’s (BoJ) 2% target.
Additionally, Tokyo’s core CPI inflation eased to 2.5% year-on-year in August from 2.9% in July, matching market forecasts. The Tokyo CPI ex Fresh Food and Energy, which is closely watched by the BoJ, climbed 3.0% YoY in August, compared to the previous reading of 3.1%. This report keeps alive expectations for further interest rate hikes. According to a Reuters poll in August, nearly two-thirds of economists expect another 25 basis point (bps) hike, up from just over half a month ago.
