Yen In Range After Inflation Data Release

The yen stayed in tight range after the release of a considerable volume of data Friday. The inflation outlook showed improvement in Japan, as indicated in the April CPI data. Deflation improved slightly with core CPI falling -0.4% yoy, easing from a -0.5% yoy decline in March. CPI excluding food and energy added 0.3% mom. Overall CPI slipped -0.7% yoy, following a previous -0.9% drop. The improvement was driven by a lesser drop in fresh food prices which fell -7.9% following a -11.5% decline the prior month. The May Tokyo CPI, the leading indicator of Japan's inflation, showed a 0.1% yoy rise (or 0.3% mom) in core CPI.

Industrial production data was also encouraging with the April IP figure unexpectedly rising 1.7% mom. This was the 5th consecutive monthly gain. Inventories climbed 0.6% mom, the second monthly rise in a row, following 7 consecutive declines. Inventory-shipment ratio gained 0.5% mom, the first increase in 7 months. Strong IP in April was driven by transport equipment which added 11.8% mom and precision instruments which soared 14.6% during the month. Other components such as electric parts &devices, glass &clay, and paper & pulp also showed a considerable improvement of more than 2%.

Data releaed by Switzerland indicated that the KOF leading indicator improved to 1.1 in May. U.K. mortgage approvals, M4, Eurozone CPI and unemployment are to be featured in the European session. Elsewhere,the dollar remain soft ahead of income and spending data. Personal income is expected to rise 0.1% in April, while spending is expected to be flat. The Fed's preferred gauge of inflation, the PCE core is expected to be slightly amended - to 1.0% yoy. The Chicago PMI is expected to improve to 50 breakeven mark in May. An additional focus will be the Canadian GDP which is expected to rise 0.1% mom in March.