USD/JPY remains under pressure as U.S. New Home Sales slip 9.3% in December, and the pair may continue to give back the rebound from the 2017-low (107.32) as the Gross Domestic Product (GDP) report is anticipated to show a slowdown in the growth rate.
The advance GDP report is expected to show the U.S. economy growing an annualized 3.0% versus the 3.2% expansion in the third-quarter of 2017, and another batch of lackluster data prints may generate fresh weekly-lows in the dollar-yen exchange rate as it saps bets for a March Fed rate-hike.
However, a pickup in the core Personal Consumption Expenditure (PCE) may ultimately heighten the appeal of the greenback as the Federal Reserve’s preferred gauge for inflation is projected to increase 1.9% per annum during the last three-months of 2017, and signs of stronger price growth may keep the central bank on course to deliver three rate-hikes this year especially as ‘many participants judged that the proposed changes in business taxes, if enacted, would likely provide a modest boost to capital spending.’
Keep in mind, recent price action keeps the near-term outlook tilted to the downside as USD/JPY starts to carve a bearish sequence, while the Relative Strength Index (RSI) dips below 30 and pushes back into oversold territory.
USD/JPY Daily Chart
The below-forecast print for Canada Retail Sales has done little to halt the recent decline in USD/CAD, but a marked slowdown the Consumer Price Index (CPI) may tame the bearish sequence in the exchange rate as it dampens bets for an imminent Bank of Canada (BoC) rate-hike.
