On Monday, the Japan's Cabinet Office released the machine order data that rose by 3.4 percent in November. That was slightly decreased compared to the previous month's increase.

However, this figure still outperforms the forecast of a 1.4% increase. On an annual basis, this successful machine order data jumped from 2.9% to 11.6% year-over-year in November. 

This figure exceeded expectations of a 6.1% increase. Japan's impressive machine order data this morning was supported by the increasingly solid international market demand. 

Please note, the machine order data is one of the indicators to measure capital expenditure of Japanese companies and industries that affect GDP. It is a common thing to do. 

The Companies are Still Cautiodue to the Raw Material Prices

Japanese companies are still likely to be cautious about spending due to production costs previously triggered by surging prices of raw materials, fuel and distribution costs. 

These factors have led to a rise in producer inflation and depressed corporate profit margins at the same time. That is agreed by some analysts in the forex market. 

Despite the obstacles which still mounting japan's industrial sector, japan's machine orders data this morning further adds to evidence that the economy continues to improve after contracting in the third quarter.

The Experts expect that the japan's economy to rebound by 6.5 percent on an annualized basis in the fourth quarter of 2021. It is supported by the increasing projections of private consumption that account for more than half of Japan's GDP. This affects some currency pairs too. 

The USD / JPY Tries to Recover 

The U.S. dollar turned stronger against the Yen in Asian trade earlier this week. The USD/JPY pair moved in the range of 114.32, strengthening by 0.16% from the daily Open price. 

Technically, the USD is trying to trim losses from the declines that formed over the past week. Despite U.S. and Japanese economic data, analysts assess if the dollar's current bearish movement is related to the prospect of Quantitative Tightening.

It has the potential to fade the urgency of the Fed's rate hike. Even so, the Fed's hawkish stance is generally believed to still support the Greenback's position in the medium term.

The United States Sales Retail Slipped Down

The U.S. Commerce Department reported that America's Retail Sales in December plunged from 0.2% to -1.9% in November. The gain was well below the expectations of 0.1%.

Core Retail Sales that do not take into account sales of automotive goods was also blocked, from 0.1% to -2.3%. According to economists, the U.S. Retail Sales slump occurred because of a reason. 

The public had been spending heavily in October, to avoid the stock vacuum that often occurs in December. January retail sales are also expected to be just as bad as the spread of Omicron variant infections in that country. 

The weakening (Retail Sales) that occurred in December is likely more due to the timing of public spending. Support comes from employment and income growth.

USD has Reached It’s Lowest Point

The growth was strengthened towards the pre-pandemic standards, as well as the abundance of cash and credit availability for consumers. That is not the end. 

The United States retail Sales data and a barrage of economic data this week were negative. That has dimmed the investors' confidence in the Fed's hawkish rhetoric.

That was despite Chairman Jerome Powell reiterating the continuation of monetary tightening in his testimony yesterday. Some fear thatthe Fed will back away from the plan.

Others are still optimistic that the monetary policy makers will continue to implement quantitative tightening as expected. Now, those who are confident of the continuation of the Fed's hawkish sentiment are beginning to dominate.