The US Dollar is gaining the upper hand against the Japanese Yen, with both currencies among the worst G8 performers this week. The pair trades near 153.50 at the time of writing, consolidating its recovery from three-month lows near 152.00, as the focus shifts to the Tokyo CPI reading, due later on the day.
The Yen went through a significant pullback on Wednesday, following comments by US Treasury Secretary Scott Bessent, who affirmed that Washington is pursuing a strong Dollar policy. Bessent also played down speculation about a US-Japan coordinated plan to support the Yen, a rumour that sent the pair tumbling last Friday.
BoJ remains committed to higher interest rates
Previously, the Yen had been supported by the hawkish tone shown by the minutes of the Bank of Japan’s (BoJ) latest monetary policy meeting. The BoJ’s committee shared the scenario of rising inflationary pressures, a weak Yen, and wage growth, which paves the path for further monetary tightening.
In that sense, Tokyo Consumer Price Index (CPI), due later on Thursday, will be closely watched for confirmation of those theories. Consumer inflation in Japan’s capital eased to 2% year-on-year in December from 2.7% in November, and the market consensus for the core CPI suggests that price pressures moderated further in January, which, if confirmed, could add negative pressure on the Yen.
In the US, the main focus on Thursday will be on the US initial Jobless Claims, which are expected to have ticked up to 205k in the week of January 24, from 200k in the previous one. Apart from that, Factory Orders are expected to have bounced up in November, while, on the negative side, the deficit on goods and services trade is forecasted to have widened in November.
Economic Indicator
Tokyo Consumer Price Index (YoY)
The Tokyo Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households in the Tokyo region. The index is widely considered as a leading indicator of Japan’s overall CPI as it is published weeks before the nationwide reading. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.
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Economic Indicator
Tokyo CPI ex Fresh Food (YoY)
The Tokyo Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households in the Tokyo region excluding fresh food, whose prices often fluctuate depending on the weather. The index is widely considered as a leading indicator of Japan’s overall CPI as it is published weeks before the nationwide reading. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.
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