AUD / JPY Nears 92.00 on Stronger-Than-Expected Aussie Retail Sales

The AUD / JPY has approached the immediate resistance level of 92.00 as the Australian Bureau of Statistics published Retail Sales (January) data that was better than expected. The 1.9% GDP growth rate was better than expected, coming in at 1.5%. In December, retail sales decreased by 3.9%.

At a moment when the Reserve Bank of Australia (RBA) and other policymakers are formulating a strategy to reduce inflationary pressures, encouraging data on retail demand will only make matters worse. Australian inflation has not yet hit its highest level despite the RBA raising the Official Cash Rate (OCR) to 3.35 percent. The RBA's policy tightening cycle is not expected to come to a stop any time soon given the lack of data suggesting a slowdown in overall demand.

On Wednesday, when Australia's GDP and CPI are published, the cross will surge.

The fourth quarter of 2022 is expected to increase by 0.7%, up from 0.6% in the third quarter. On an annualized measure, Australia's GDP is expected to grow by 2.7%, up from 5.9% in the previous report.

The January CPI is expected to fall to 7.9% from 8.4%, in addition to the Australian GDP figures. RBA Governor Philip Lowe and other policymakers who are worried about Australia's persistent inflation will find relief from a reduction in monthly inflationary pressures.

The surprisingly dovish tone of Bank of Japan (BoJ) Governor-nominee Kazuo Ueda is affecting the value of the Japanese Yen. From the perspective of BoJ Ueda, Japan's multi-decade high inflation is suitable to continue the expansionary policy to stimulate wages and domestic demand as a result of external forces.

Japan's yearly Retail Trade (Jan) increased to 6.3% from 4.0% and 3.8% in early Asia. The Japanese Yuan, however, was unable to benefit.