Editor’s Note
This analysis examines the potential for resilient USD/JPY movement in the coming week, highlighting key US economic data releases as critical drivers. The focus will be on preliminary Q4 GDP figures and their implications for the dollar amid concerns of a slowdown.
The USD/JPY pair may show resilient price movements next week. Amid growing concerns about a US economic slowdown, the recently released US retail sales figures were lackluster. Attention will be focused on the preliminary US Gross Domestic Product (GDP) figures for the October-December period. If the growth rate slows from the previous result of +4.4%, it could easily become a factor for selling the dollar. The minutes from the Federal Open Market Committee (FOMC) meeting, to be released on the 18th, and the Philadelphia Fed Manufacturing Index, to be announced on the 19th, are also likely to be watched.
On the other hand, the Liberal Democratic Party’s decisive victory in the House of Representatives election held on February 8th means that proactive fiscal policy is likely to remain a focus. While the election helped curb excessive yen weakness, and there were moments of yen buying due to unwinding of previous yen-selling positions, yen-selling pressure is expected to remain persistent. For USD/JPY, the low around 152.10 yen marked on January 27th, following remarks by former US President Trump perceived as tolerating a weaker dollar, is seen as a support line. It has been pointed out that if the pair clearly falls below this level, market developments could shift towards testing the 150 yen level.
The preliminary US GDP for the October-December period, scheduled for release on the 20th, is projected to show an annualized quarter-on-quarter growth of +2.8%, slowing from the previous +4.4%. If the figure falls below market expectations and fuels concerns about an economic slowdown, it is likely to become a factor for selling the dollar.
The US Core PCE Price Index for December, scheduled for release on the 20th, is currently projected to show a year-on-year increase of +3.0%, exceeding the previous result. If it meets expectations, dollar buying is anticipated due to a retreat in expectations for interest rate cuts.
• Expected Range: 151.50 yen – 155.00 yen
• Forecasts for economic indicators scheduled for release from February 16th to 20th are as follows:
○ (Japan) Q4 GDP (Preliminary) – Scheduled for release on Monday, 16th, at 8:50 AM JST
• Forecast: Annualized quarter-on-quarter +1.6%
Growth rate is expected to be positive due to resilient private consumption and capital investment. However, both exports and imports in external demand are seen declining slightly, and with sluggish service exports, the impact on the growth rate is considered neutral.
○ (US) December Durable Goods Orders – Scheduled for release on Wednesday, 18th, at 10:30 PM JST
• Forecast: Month-on-month -1.9%
The reference November result showed a high increase of +5.3%. A rebound decline is expected for December. However, orders excluding transportation equipment could be positive.
○ (US) December Trade Balance – Scheduled for release on Thursday, 19th, at 10:30 PM JST
• Forecast: -$55.8 billion
The reference November result was -$56.8 billion. For December, no significant increase in import/export values is expected, so the trade deficit is likely to be close to the November level.
○ (Japan) January National Core CPI – Scheduled for release on Friday, 20th, at 8:30 AM JST
• Forecast: Year-on-year +2.0%
The reference December result remained at +2.4% year-on-year, influenced by lower gasoline prices. For January, the rise in food prices is seen slowing somewhat, and the rate of increase in other items is also expected to moderate slightly, so the core inflation rate is projected to be below the December result.
○ Other Major Economic Indicators Scheduled for Release
• 16th (Mon): (EU) December Eurozone Industrial Production
• 17th (Tue): (US) February NY Empire State Manufacturing Index
• 18th (Wed): (Japan) January Trade Balance, (NZ) RBNZ Official Cash Rate, (US) December Durable Goods Orders
• 19th (Thu): (Australia) January Unemployment Rate
• 20th (Fri): (EU) February Eurozone Manufacturing PMI, (US) Q4 GDP (Preliminary), (US) February Manufacturing PMI