The retail sales report released earlier for the US was pretty strong, showing a 0.7% increase in March, suggesting that consumer spending remains pretty strong in the US. This has sent the USD higher, with USD/JPY being already bullish ahead of the release and after the numbers were published this pair surged to 154.40s.

USD/JPY Chart H4 – Buyers Remain Totally Unchallenged

The surge in USD/JPY above 154.00, with stops up to 154.230 reflects a significant move in the currency pair. The 1.54 level was broken without much hassle, while the stopped helped push the price higher after being triggered.

US March Retail Sales Report

• US March retail sales +0.7% vs +0.3% expected
• February retail sales were +0.6%

Breaking down the data further:

• Excluding auto sales, there was a notable increase of 1.1%, surpassing the expected 0.5%. The previous reading for ex-auto sales was 0.3%.
• The control group, which excludes volatile categories like autos, gasoline, building materials, and food services, also saw a strong uptick of 1.1%. This exceeded expectations of 0.4%. The previous control group reading was revised upwards from 0.0% to +0.3%.
• Retail sales excluding gas and autos showed a notable increase of 1.0% compared to the previous reading of 0.3%.

While the US March retail sales report indicates strong consumer spending, there are concerns regarding the sustainability of this momentum. Economists highlight that while the retail sales figures are robust, there are underlying factors suggesting potential challenges ahead.

Real after-tax income growth has slowed notably, indicating a potential constraint on consumer spending power. Additionally, much of the excess savings accumulated during the pandemic has likely been depleted, limiting further discretionary spending. Moreover, leading indicators point to a potential softening in the labor market, which could further dampen consumer sentiment and spending in the future. Therefore, while the current retail sales report is undoubtedly positive, it’s essential to consider these underlying factors and their potential impact on future consumer behavior and economic dynamics.

USD/JPY Live Chart