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USD/JPY edges lower on economic data

Wednesday, February 28, 2024

Today’s headlines

What’s happening: The US dollar edged lower against the Japanese yen on Tuesday as investors assessed the latest economic reports.

What happened: The USD/JPY forex pair declined on Tuesday following the release of Japan’s core consumer inflation data.

However, the US dollar gained against the euro on profit taking, with the EUR/USD staging an uptrend since mid-February after hitting its weakest level since November 14.

Why it matters: Data released from Japan showed the headline and core inflation rates easing to 2.2% and 2%, respectively, in January, from 2.6% and 2.3% in the prior month. These were the lowest readings since March 2022.

However, the core inflation rate came in higher than market estimates and fuelled prospects of the Bank of Japan putting an end to negative rates by April. Japan’s core consumer price index also slowed to 2% in January, from 2.3% in December, but was above market estimates of 1.8%.

In the US, orders for durable goods contracted by 6.1% in January, steeper than market expectations of a 4.5% decline. The FHFA house price index in the US increased 0.1% in December, slowing from a 0.4% rise in November. US dollar traders also pulled back projections of the timing of interest rate cuts for 2024.

The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell slightly on Tuesday.

The euro had been receiving support from speculations of interest rate cuts by the European Central Bank by 90 basis points (bps) this year.

The USD/JPY forex pair declined more than 0.1% to 150.51, while the EUR/USD forex pair fell around 0.1% to 1.0846 on Tuesday and the GBP/USD pair lost 0.01% to reach 1.2684 during the session.

What to watch: Data on US GDP growth will be released today. The US economy is expected to expand by an annualised 3.3% in the fourth quarter, compared to 4.9% growth in the prior quarter. Investors also await the data on the US core personal consumption expenditures price index, scheduled for released on Thursday, which is expected to significantly impact the Fed’s upcoming rate decision. Analysts expect a 0.4% rise in the index for January.

Data on inflation rate from the Eurozone, Germany, France and Spain are also due to be released this week.

The markets today

Lowe’s Companies will be in focus today after releasing results for its fourth quarter

Context: Shares of Lowe’s gained on Tuesday, after the company reported upbeat quarterly results.

Details: Higher mortgage rates and a decline in new construction projects have resulted in customers delaying renovating and sprucing up their houses, which triggered a contraction in sales in the fourth quarter.

Lowe’s comparable sales fell 6.2% year-over-year in the quarter on slow DIY demand and unfavourable weather in January. Gross profits contracted to $6.03 billion, from $7.26 billion in the year-earlier quarter, although profit margins widened slightly to 32.40%, from 32.33%.

Lowe’s total sales fell to $18.6 billion, from $22.4 billion in the year-ago quarter, topping the consensus estimates of $18.45 billion. Earnings came in at $1.77 per share, which exceeded Wall Street expectations of $1.68 per share.

CEO Marvin R. Ellison said, “We remain confident in the long-term strength of the home improvement market, and we are making the right investments in our Total Home strategy to take share.”

Management guided to revenues of $84 billion to $85 billion for fiscal 2024, short of market expectations of $85.61 billion. They projected adjusted earnings of $12.00 to $12.30 per share, below estimates of $12.95 per share.

How shares responded: Lowe’s shares gained 1.8% to close at $235.39 on Tuesday, following the release of quarterly results. The stock has added around 11% over the past month.

What to watch: Investors will continue monitoring inflation and mortgage rates, which are expected to significantly impact the company’s overall results ahead.

Other Markets: European indices closed mostly higher on Monday, with the DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.76%, 0.23% and 0.18%, respectively, and the FTSE 100 down by 0.02%.

The news shaping the markets

The US and various European nations said they were not looking to send ground troops to Ukraine. The news sent the RUB/USD forex pair slightly higher in forex trading this morning.


Australia’s construction work completed increased 0.7% to A$65,440.5 million in the fourth quarter, slowing from a 1.3% surge in the prior quarter, which exerted pressure on the AUD/USD forex pair.


The Reserve Bank of New Zealand kept its official cash rate unchanged at 5.5% during its first policy meeting of the year, sending the NZD/USD pair lower in forex trading this morning.


Brazil’s mid-month consumer price inflation rose to 0.78% in February, from 0.31% in the prior month, exerting pressure on the BRL/USD forex pair.


The American Petroleum Institute said US crude oil stockpiles rose by 8.428 million barrels in the week ending February 23. This being the fourth straight week of gains sent the WTI crude oil prices lower this morning.

What else to watch today

Turkey’s balance of trade and economic optimism index, Italy’s manufacturing confidence index and consumer confidence index, Eurozone’s economic sentiment indicator, consumer confidence indicator, consumer inflation expectations index, industry confidence indicator, gauge for selling price expectations and services confidence indicator, Brazil’s IGP-M inflation, Spain’s industry confidence indicator, US MBA mortgage applications, goods trade balance, wholesale inventories, real consumer spending, crude oil inventories, stocks of gasoline and distillate stocks, Canada’s current account and average weekly earnings, Russia’s unemployment rate, business confidence, corporate profits, industrial production, real wages, retail sales and GDP, as well as Saudi Arabia’s money supply M3 and value of loans.


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