USDJPY Once More Through 112.00 if US Spending Rises?

Market Drivers April 29, 2019
FX steady at the start of the week
US Personal Spending key focus today
Nikkei -0.22% Dax -0.11%
Oil $62/bbl
Gold $1282/oz.

Europe and Asia:
No data

North America:
USD Personal Income/Spending 8:30

The FX markets were quiet at the start of the week, with the dollar slightly lower against the majors but up against the yen as traders were content to keep rates steady ahead of a very big week in event risk.

The EURUSD rose to 1.1165 in morning London dealing while cable climbed to 1.2940 as short covering flows helped fuel the early moves despite weak eco data from the region. Euro area confidence fell to its weakest level since September of 2016 as economic conditions on the Continent remain lackluster. But the pair got a boost after S&P refrained from downgrading Italian debt which help fuel a rally in the sovereigns.
Both credit and equity markets were steady as well with benchmark US 10 year at 2.50% and S&P futures pointing to a flat open.

Friday’s US GDP data – which on surface looked to be positive for the dollar – proved to be the buck’s undoing after traders looked closer at the underlying components which showed an absence of any price pressures and a sharp drop off in consumer demand which printed at a paltry 1.2% rate – far lower than the 3,2% headline rate for the GDP. That’s why today’s Personal Spending/Income figures which are usually a second tier release could be a bigger catalyst in trade as the day proceeds.

If the numbers pop to 0.7% from 0.1% as forecast they would validate the dollar bullish case that the US consumer is catching up with the broader rebound in US economy and therefore shift the market expectations regarding Fed policy going forward.

USDJPY continues to trade near session highs ahead of the release and a positive number could embolden the bulls to push the pairs towards the 112.00 level once again as the day progresses.