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Yen holds gains in Asia on producer prices, safe-haven

5/15/2017, 3:04:12 PMBasics of Trading
Yen holds gains in Asia on producer prices, safe-haven

The yen gained held gains in Asia on Monday as producer prices ticked up more than seen and safe haven demand on weaker data from China and as North Korea rattled markets with a statement its latest missile test at the weekend was capable of carrying a large nuclear warhead and investors also fretted over the potential spread of cyberattacks that have already hit 200,000 victims in at least 150 countries.

USD/JPY changed hands at 113.36, down 0.02%, while AUD/USD traded at 0.7389, up 0.16%. In Japan, producer prices rose 0.2% month-on-month in April and 2.1% year-on-year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.01% to 99.06.

China reported industrial production rose a less than expected 6.5%, missing a 7.5% gain seen. As well, China said retail sales for April rose 10.&% on year, more than the 10.^% seen, and fixed-asset investment gained 8.9%, below the 9.1% expected.

Elsewhere, Australia reported home loans data for the March quarter-on-quarter slumped 0.5%, compared with a 0.1% gain expected.

Later this week, the U.S. reports on building permits, housing starts, industrial production and jobless claims for fresh indications on the strength of the economy. Japan is to report on first quarter growth and the UK is to produce what will be closely watched data on inflation, employment and retail sales amid signs that the headwinds from Brexit are mounting.

Last week, the U.S. dollar fell against a basket of the other major currencies on Friday as lackluster U.S. data on inflation and retail sales saw investors temper expectations for more rate hikes by the Federal Reserve.

Data on Friday showed that U.S. retail sales grew less than expected last month, and core inflation dipped, raising doubts over whether the Fed can hike rates two more times this year.

Retail sales rose 0.4% in April, the Commerce Department said, falling short of economists’ expectations for a 0.6% increase.

At the same time, the Labor Department reported that the annual rate of inflation slowed to 2.2% in April from 2.4% in March.

Annual core inflation, which strips out food and energy costs, fell to 1.9%, the lowest since October 2015. Consumer prices rose 0.2% last month, rebounding from a 0.3% drop in March.

Markets are currently pricing in around a 70% chance of a rate hike in June in the wake of the data, according to Investing.com's Fed Rate Monitor Tool.