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Forex - USD/JPY drops as U.S. retail, sentiment data miss expectations

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Shutterstock photo - The dollar dropped against the yen on Friday after U.S. retail sales figures and a widely watched consumer sentiment gauge fell short of expectations and fanned fears the Federal Reserve may wait longer to wind down monetary stimulus measures.

The yen, meanwhile, firmed against the dollar on Friday after investors concluded the currency was oversold in wake of a massive Bank of Japan monetary easing launch.

In U.S. trading on Friday, USD/JPY was trading at 98.84, down 0.82%, up from a session low of 98.67 and off a high of 99.81.

The pair was likely to find resistance at 99.81, the earlier high, and support at 98.67, the earlier low.

The Fed is currently purchasing USD85 billion in mortgage debt and Treasury holdings held by banks a month, a monetary stimulus tool known as quantitative easing that pushes down interest rates and pumps the economy full of liquidity to encourage investing and hiring, which weakens the dollar as a side effect.

While the Fed will likely wind down such programs eventually, that day may come later rather than sooner, market participants concluded after digesting U.S. data.

In the U.S. earlier, the Thomson Reuters/University of Michigan's preliminary consumer sentiment index dropped to a 9-month low in April, falling to 72.3 from 78.6 in the previous month.

Analysts were expecting the index to tick down to 78.5 this month.

Elsewhere, official data revealed that retail sales in the U.S. fell 0.4% in March, defying expectations for a 0.1% rise after a 1% increase the previous month.

Core retail sales, which are stripped of volatile automobile sales, also dipped 0.4% last month after a 1% increase in February, missing similar expectations for a 0.1% rise.

The Labor Department, meanwhile, reported that the U.S. producer price index fell 0.6% in March, more than an expected 0.2% decline and way off a 0.7% gain the previous month.

The country's core producer price index rose 0.2% last month, in line with expectations, following a 0.2% increase in February.

Meanwhile, Japan's currency took a break from its recent slide against the greenback on Friday.

The dollar recently soared to 4-year highs against the yen after the Bank of Japan said it plans to double its asset purchase program over the next two years and extend the maturities of the bonds it purchases as part of a strategy to hit a 2% inflation target.

Bottom fishers brought the Japanese currency up higher on Friday, however.

The yen, meanwhile was up against the pound and up against the euro, with GBP/JPY down 1.07% and trading at 151.70 and EUR/JPY trading down 0.96% at 129.31.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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