USD/JPY climbs confidently above 145.00 amid cautious market mood

• USD/JPY refreshes nine-month high above 145.00 amid risk-off market mood.
• Economic challenges in China improve the appeal for the US Dollar.
• US Retail Sales are seen expanding by 0.4% in July, accelerating from the 0.2% increase recorded for June.

The USD/JPY pair printed a fresh nine-month high at 145.57 on Monday, capitalizing on bearish market sentiment. The asset continues its five-day winning streak amid sheer strength in the US Dollar as investors remain worried about China’s economic outlook.

S&P500 prints some losses in early New York, portraying caution due to modest recovery in the United States Consumer Price Index (CPI) for July. The US Dollar Index rallies to near 103.46 amid improvement in its appeal as a safe haven.

Investors are worried about Chinese economic prospects as the economy is facing deflation due to weak demand and declining exports. Also, Chinese firms struggle to raise the price of goods and services at factory gates. This has improved the appeal of the US Dollar.

After a slower-than-expected inflation increase and a decent rebound in Producer Price Index (PPI) in the US economy for July, investors shift their focus to the Retail Sales data. As per the consensus, Retail Sales are seen expanding 0.4% in July, accelerating from the 0.2% increase recorded for June.  A similar performance is expected for retail sales excluding autos.

Meanwhile, the Japanese Yen remains under pressure as Japan’s Ministry of Finance (MoF) doesn’t deliver any sign of stealth intervention. Preliminary Gross Domestic Product (GDP) for Q2 grew at 0.8% vs. Q1 growth of 0.7%. On an annualized basis, GDP expanded at 3.1% vs. the former release of 2.7%. An absence of monetary policy support from the Bank of Japan (BoJ) keeps the Japanese Yen on the tenterhooks.