USD continues to decline upon recent US economic data; mixed data supported JPY against USD

USD inched down as investors digest economic data from last week. Data released on Friday showed that, Core PCE Index (Personal Consumption Expenditure Price Index) increased 3.1% on a YoY basis in April, far above the 2.9% forecast and the previous release at 1.9%. The Index was also above the 2% target set by the Fed. Investors are worried that this may push the Fed to adjust its policy sooner than expected. This Friday we will have non-farm payrolls released; the current consensus is at 621k.

In APAC, Japan’s industrial production for April increased by 2.5% compared with last month, despite below the 4.1% forecast. Moreover, retail sales increased 12% on a YoY basis, despite also below the forecast at 15.3%. Although the data failed to beat forecasts, JPY is still slightly up against USD. In China, PMI released at 51, below the forecast at 51.1 but still above the threshold at 50, showing some growth.