MARKETS & FX
US May Retail Sales Up 0.9% MoM, Consumer Spending Stays SolidA · FULL TRANSLATION
# US retail sales# consumer spending# Federal Reserve# rate gap# yen
Key Points
- US May retail sales rose 0.9% MoM, beating expectations, with consumption staying solid
- Strong spending supports the US economy and reinforces room for a hawkish Fed
- US consumption and the rate path indirectly steer the dollar and yen
- For Japan equities and FX it is a key external data point
Analysis
US May retail sales rose 0.9% month on month, beating expectations and showing solid consumption. For Japan-asset watchers, the US data matters because it ties to the Fed's path and thus the yen. Strong spending signals US economic resilience and gives the Fed room to keep rates high or hike, and higher US rates widen the US-Japan gap and intensify yen depreciation, part of the backdrop to the yen breaking 161. In other words, US consumers' wallets indirectly affect how cheap yen exchange is and equities' FX bonus. Read US retail, jobs and inflation together to judge the Fed's next move and its transmission to the yen.