Weak retail sales may accelerate losses in Treasury yields and USD/JPY – FXStreet

FXStreet (Barcelona) - FXStreet Editor and Analyst, Omkar Godbole, feels that markets are yet to price in a probable decline in US retail sales, further anticipating that soft retail sales data might trigger further losses in Treasury Yields and USD/JPY.

Key Quotes

“The drop in USD/JPY and Treasury yields seen today was largely triggered by sharp weakness in the commodities and weak global growth forecasts from the World Bank.”

“Moreover, the yields as well as the USD/JPY pair has steadied ahead of the data, indicating the markets have not priced-in the expected 0.15 decline in Retail Sales.”

“Thus, a contraction in retail sales is likely to push the 10-yr yield towards 1.75%, thereby pushing the USD/JPY pair toward 115.55 (Dec. 16th low) and 114.61 (100-DMA) levels.”

"However, a slight relief may come in the form of a positive surprise from retail sales- ex auto data. Still a weak headline figure is likely to weigh over Treasury yields and the USD/JPY pair.“