AUD/JPY reclaims 94.00 despite higher-than-expected Japan Retail Trade

• AUD/JPY has reclaimed 94.00 despite an outperformance by Japan’s Retail Trade.
• The Retail Trade has landed at 3.6% and 0.6% on an annual and a monthly basis.
• An underperformance is expected from the Aussie Retail Sales data.

The AUD/JPY pair refreshed its intraday low at 93.92 but has recaptured the critical level of 94.00 despite Japan’s Ministry of Economy, Trade, and Industry having reported robust Retail Trade. The annual Retail Trade has landed at 3.6%, much higher than the expectations and the former release of 3.3% and 2.9%, respectively. While the monthly economic data has been recorded at 0.6%, higher than the estimates of -0.1% but lower than the prior print of 1%. The Large Retailer Sales have climbed to 8.5%, significantly higher than the forecasts of 1.3% and the prior print of 4%.

A robust Retail Trade data indicates that that consumer spending has increased substantially and eventually the overall demand by the households. No doubt, the Bank of Japan (BOJ) will continue with its ultra-loose monetary policy in its upcoming monetary policy meetings despite the robust economic data and higher inflation rate as it has crossed the desired levels significantly.

Last week, the Japanese economy reported Japan’s National Consumer Price Index (CPI) at 2.5% while the core National CPI which excludes food and energy prices landed at 0.8%. It is worth noting that the inflation rate in the Japanese economy is majorly guided by the soaring food and energy prices. The BOJ will stick to its prudent monetary stance till the time it finds out that robust wage growth and firmer aggregate demand have become the real catalysts behind spurring the inflation rate.

On the aussie front, investors are focusing on the release of the Retail Sales by the Australian Bureau of Labor Statistics. A preliminary estimate for the economic data is 0.4%, lower than the prior release of 0.9%.  This indicates that consumer spending has remained lower in the previous month, which could be the outcome of lower wage growth in accordance with higher price rises. It could be a reflection of a decline in the inflation rate or a decline in the overall aggregate demand.