Forex - Japanese yen flat after lower CPI, better retail sales data

Investing.com - The Japanese yen was nearly flat on Friday after consumer prices in Japan rose slower than expected, but retail sales beat forecasts in data sets followed closely by the market.

USD/JPY traded at 102.17, down 0.01%, after the data, while AUD/USD spiked to 0.9292, up 0.37%, on sentiment that the Reserve Bank of Australia will not attempt to jawbone the currency lower for now.

In Japan, core consumer prices for February rose 1.3% year-on-year, compared to an expected gain of 1.5%,  the ninth straight annual gain.

The Bank of Japan aims for sustained 2% inflation in 2015.

Preliminary retail sales data for February showed a gain of 3.6%, compared to an expected rise of 3.2%. Retail sales are likely to show a higher increase in March on domestic demand for cars and jewelry before a 5% consumption tax is raised to 8% on April 1.

Overnight, the dollar gained on upbeat fourth-quarter economic growth rates coupled with better-than-expected weekly jobless claims numbers.

That latest of improving U.S. economic indicators kept expectations firm that the Federal Reserve will wind down monthly asset purchases this year and hike interest rates the next, which strengthened the dollar on Thursday.

The Fed's asset-purchasing program, currently set at $55 billion in Treasury and mortgage debt a month, weakens the dollar by suppressing long-term interest rates to spur investing and hiring.

The Commerce Department reported earlier that U.S. gross domestic product was revised up to 2.6% in the final three months of 2013, from a preliminary estimate of 2.4%. Market expectations had been for an upward revision to 2.7%.

Still, the report showed that personal spending was revised up to 3.3% from 2.6% initially, the fastest rate of growth in three years, which drew applause from investors.

Separately, the Labor Department said the number of individuals filing for initial jobless benefits in the U.S. last week declined by 10,000 to a 311,000 from the previous week’s revised total of 321,000.

Analysts were expecting jobless claims to rise by 4,000.

Thursday's data fueled already growing opinions that a spate of disappointing economic indicators released earlier in the year were the product of rough winter weather and not due to an underlying decline in demand.

Investors shrugged off a National Association of Realtors report revealing that its pending home sales index dropped by 0.8% last month, disappointing expectations for a 0.3% gain.

Pending home sales for January were revised down to a 0.2% decline from a previously reported gain of 0.1%.

Year-on-year, pending home sales fell at annualized rate of 10.2% in February, worse than expectations for a 8.5% decline, after declining 9.3% in January.

The U.S. Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was down 0.03% at 80.25.

On Friday, the U.S. is to round up the week with a report on personal spending and revised data on consumer sentiment.