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Today’s blowout US Retail Sales numbers should have provided the catalyst to take USDJPY through the 111.00 level, but so far the reaction has been rather muted. US Retail Sales came in at 0.6% versus 0.4% breaking a long string of disappointing months of misses. After a very long hibernation period, the consumer appears finally to be ready to spend and that could spell much better growth for US economy in second half of this year.
The market, however, remains wary with 10-year yields still refusing to rise above the recent highs of 2.30%. It may take another month of strong data to convince dollar bulls to enter the fray, but for now, USDJPY appears to have made a double bottom near the 109.00 level and barring any further jolts of risk aversion the pair should remain supported at these levels and slowly move towards the recent resistance points of 111.00-112.00.