Japan’s yen went down last week as their neighbor China reported better than expected figures in consumer price growth, putting an end to any possible monetary easing. The CPI (Consumer Price Index) went up at a higher pace than expected in the month of February, pushing China into a narrow corridor for what regards any further easing. The Chinese CPI went up 1.6% on a monthly basis versus an expected 1.1% expansion while the yearly growth printed 2.3% versus the previous 1.9% level. Expectations were met for what regards producer prices, the data showing a 4.9% contraction year-on-year.
Japan’s CGPI (Capital Goods Price Index) printed a 0.2% fall last week, under February’s 0.3% drop on a monthly basis. The yearly figure went down 3.4% as expected.
Later in the week, the YEN support became stronger as weak data came out of China on Thursday, reiterating concerns regarding the global economic growth slowdown: Chinese exports fell by 25% in the month of February, the biggest drop since May 2009. Also, in the YEN’s favor were the latest BoJ (Bank of Japan) reports, which are signaling a decay in the probability of a rate cut in the next week’s monetary policy meeting, in the attempt to prevent an appreciation of the currency.
On Friday, the YEN closed the session at 113.80 against the USD, just a few pips over the week’s opening price of 113.77. The resistance is now set at the 114.45 (10th of March high) while the support line is at 112.79 – the daily low – and right after that 112.22 (9th of March low).
On Saturday, the latest Chinese data release shows that the industrial production is continuing to slow down in the first two months of this year, although Beijing is continuously struggling to reduce the excess production capacity of the sector. As per the National Bureau of Statistics, there was a rise of 5.4% in the value-added in the industrial output for January and February 2016 reported to the same period a year earlier, but on a monthly basis, there was a slowdown of 5.9% in December 2015. The non-rural fixed assets investments are up 10.2% from January-February, 2015 and up 10% compared to the whole year 2015. The retail sales (a sector which was still on the green side for China) went up 10.2% in the same period – reported to last year, going down from an 11.1% increase in the month of December and also under the expected 11.0% growth.
