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Japan data sees muted yen reaction

We have struggled to see any big moves in the FX space this week and it seems the trend is set to continue heading into the weekend.

There has been some activity on the Japan front with a raft of economic releases hitting the wires early in Asia. Japan’s all important core CPI reading for April came in in line with expectations at +2.3% which was a marked improvement from the previous reading of 0.7%. This showed Japan remains on track with inflation being the key metric the BoJ is watching.

Meanwhile industrial production disappointed as it showed a 2.5% contraction. The overall impact of the data was a slightly firmer yen as USD/JPY declined to around 101.60. However, considering the big moves we are accustomed to seeing in USD/JPY, this move was nothing to be concerned about. It is clear there is a sense of caution prevailing across the global landscape at the moment and perhaps next week will be pivotal for fresh catalysts. For now I feel the pair will continue to find support in the 101.50 region where it has found significant support in the past.

AUD extends gains

Meanwhile, the AUD has continued its run this week with AUD/USD extending its gains in Asian trade in a move that was triggered by yesterday’s encouraging capex numbers. This morning we had private sector credit data which showed a 4.6% rise year-on-year, better than an expected 4.6% rise. Some feel this implies confidence is on the rise.

The calendar is quite light heading into the weekend with the notable releases being personal income and spending along with consumer sentiment and inflation expectations. Perhaps another round of Fed speak will offer some insight on the US economy and what to expect going forward.

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