Forex News – USDJPY drops after poor US retail sales

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Dollar fell sharply against yen after poor US retail sales data today showed May sales down 0.2 percent. This is a second consecutive monthly drop, highlighting the continuing sluggishness of the US economy.

The main driver behind the drop in retail sales is the limited gains in payrolls and continued high unemployment exceeding 8 percent. These factors will make it harder for consumer spending, the biggest part of the US economy, to accelerate from a first-quarter advance that was the biggest in a year.

Adding to the grim news was a separate report on Producer Price Index. The May PPI showed that prices contracted by 1.0 percent on a monthly-basis after contracting by 0.2 percent in April, and by more than the expected decline by 0.6 percent.

Following the release of the data at 12:30 GMT, the USDJPY took a dive lower from 79.60 to 79.30 within a half hour of the news.