Data Misses Estimates

Yen has firmed as the session has worn on, the greenback giving back its early gains. USD/JPY last down 15 pips at 109.70.

• Japan's industrial output rose 15.4% Y/Y in April below estimates of 16.9%, while the M/M figure also missed estimates at 2.5%. The pace of increase was faster than March's figure at 1.7% M/M, strong exports were adduced as being the driving force, but increases were tempered by the continuing coronavirus restrictions which are set to be in place until June 20. Following the release METI said it maintained its view that production is recovering.
• Other data showed retail sales rose 12.0% Y/Y in April, below estimates of 15.2%, department and supermarket sales rose 15.5% which was in-line with consensus. The bigger misses highlight the sluggish domestic recovery
• Elsewhere, PM Suga's approval ratings continue to take a hit in the opinion polls, with his COVID policies weighing there.
• From a technical perspective USD/JPY the recent break higher confirms a resumption of the recovery that started Apr 23. Attention is on 110.15, a Fibonacci retracement and this year's high print of 110.97 from Mar 31. A break of the latter would confirm a resumption of this year's uptrend. Key short-term support has been defined at 108.56, Low May 25.
• Still a few releases on the economic docket today, consumer confidence and housing starts are due later in the session.