Release Explanation: The Domestic Corporate Goods Price Index measures prices for goods purchased by Japanese corporations. As prices for input materials and the overall cost of manufacturing products change, companies adjust retail prices accordingly. Increases in the index often precede upward movement in the CPI. If an increase in the CGPI is followed by a rise in the CPI, concerns about inflation may prompt the Bank of Japan to raise interest rates.
Trade Desk Thoughts: Domestic corporate goods prices came in lower than expected with a reading of -1.1 percent as wholesale prices fell at a faster pace during February as the global recession slashed the cost of energy and other commodities. Economists say that the nation could face its deepest recession since 1945 which may bring back deflation which plagued the country for nearly a decade up until 2005. A swift drop in exports in the last quarter has forced many manufacturers in Japan to slow production and fire thousands.
Forex Technical Reaction: The Japanese yen has not had a significant reaction to these releases and is currently testing the previous day’s high near 98.85.