USD/JPY hits 6-mth high as BoJ Core CPI accelerates - MarketPulse

USD/JPY hits 6-mth high as BoJ Core CPI accelerates – MarketPulse

Time Stamp: May 23, 2023 6:14 AM
Source Node: 2104671

  • BoJ Core CPI rises to 3.0%
  • USD/JPY hits 6-mth high

USD/JPY climbed as high as 138.87 earlier on Tuesday, its highest level since May 28th. The yen has edged lower and is trading at 138.43 in the European session, down 0.17%.

BoJ Core CPI surprises to the upside

Japan released BoJ Core CPI earlier in the day. The March reading rose to 3.0%, up from 2.9% in February and above the estimate of 2.8%. This is the BoJ’s preferred inflation gauge and is another indication that inflation remains sticky and above the Bank’s target of 2%.

There is a widespread feeling in the markets that change is coming to the Bank of Japan, after years of deflation and an ultra-loose policy. The new Governor, Kazuo Ueda has kept a fairly low profile, perhaps to keep market volatility at a minimum during a sensitive time for the central bank. Ueda has indicated that he would consider tightening policy if it was evident that inflation was sustainable at 2%. The BoJ insists that inflation is still temporary but this argument will start to ring hollow if inflation indicators continue to point to inflation hovering around 3%.

If the BoJ were to tighten, it would likely adjust or phase out its yield control curve policy, rather than raise interest rates. The BoJ widened the target band for 10-year Japanese government bonds in December, which sent the yen sharply higher. Another widening of the target band would likely send the yen higher, and speculators are betting that the Ueda will eventually shift policy which will boost the yen.

We’ll get another inflation reading on Thursday, with Tokyo Core CPI expected to ease to 3.3% in May, following a 3.5% gain in April.

.

USD/JPY Technical

  • USD/JPY tested support at 138.37 earlier in the day. Below, there is support at 137.45
  • There is resistance at 139.25 and 140.55

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher
Kenny Fisher

Latest posts by Kenny Fisher (see all)

Time Stamp:

More from MarketPulse