The yen extended its slide on Tuesday, falling against most of its major counterparts, as it continued to be weighed by rumours of a delay in the planned sales tax hike. Reports from Friday that Japan’s government may postpone next year’s increase in the sale tax have underscored the weakness in Japan’s economy, dragging down the yen.
The dollar edged up to 111.22 yen in late Asian trading on Tuesday, while the euro hit a two-week high of 124.13 yen. Better-than-expected data on Japanese household spending and industrial output failed to lift the currency.
Household spending in Japan rose by 0.2% month-on-month in April. The figure is down from the 0.8% rate in the previous month but much stronger than the forecast of a 0.6% decline. Industrial production also surprised on the upside as output increased by 0.3%, defying expectations that it would drop by 1.5%.
In contrast, positive data out of Australia boosted the Aussie, especially against the yen where it jumped by 0.8% to stand at 80.45 in late Asian trading.
Building approvals in Australia were up 3% in April, beating estimates of a 3% drop and underlining the strong housing sector. There was also good news on the trade front as the current account surplus in the first quarter was bigger than expected at A$20.8 billion versus estimates of A$19.5 billion. The surplus was driven by a 4.4% growth in the volume of exports but imports fell by 0.8% over the quarter.
The strong data drove the Australian dollar higher as it dampened expectations that the Reserve Bank of Australia would be in a hurry to cut rates further. The Aussie was up 0.7% against the US dollar at 0.7231 in late Asian session.
The euro and the pound both slipped against the dollar on Tuesday as the greenback continued to be supported by growing expectations of a Fed rate hike in the coming months.
The single currency meanwhile was also slightly dented by worse-than-expected retail sales figures out of Germany. Retail sales in Germany tumbled by 0.9% month-on-month in April instead of rising by the same amount as expected.
Coming up later today, flash inflation estimates out of the Eurozone will be the main data in the European session, while in the North American session, Canadian GDP and US personal income and spending figures will come into focus.