USD/JPY holds above 145.00 after the Tokyo CPI inflation data

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  • USD/JPY gather strength around 145.20 in Friday’s early Asian session, gaining 0.26% on the day. 
  • Tokyo CPI rose 2.2% YoY in September vs. a 2.6% rise prior.
  • The US August core PCE data will be closely monitored. 

The USD/JPY pair attracts some buyers to near 145.20 on Friday during the early Asian session. The pair gains ground near three-week highs after the Tokyo Consumer Price Index (CPI). The attention will shift to the US Personal Consumption Expenditures (PCE) Price Index for August, which is due later on Friday. 

Data released by the Statistics Bureau of Japan showed on Friday that the headline Tokyo Consumer Price Index (CPI) increased 2.2% YoY in September, compared to a 2.6% rise in August. Meanwhile, the CPI ex Fresh Food, Energy climbed 1.6% YoY in September, compared to a 1.6% rise in the previous reading. Tokyo CPI ex Fresh Food rose 2.0% for the said month, compared to a 2.4% rise in August and in line with the market consensus of 2.0%.

The Japanese Yen (JPY) edges lower in an immediate reaction to Tokyo’s CPI inflation data. The slower price increase is unlikely to deter the Bank of Japan (BoJ) from raising interest rates later this year as BoJ Governor Kazuo Ueda committed to hiking its borrowing costs if the economy performs as expected. 

However, uncertainty surrounding Japan’s interest rate path might cap the upside for the JPY and create a tailwind for USD/JPY in the near term. Ueda said this week that the Japanese central bank is not in any rush to raise rates and can wait for more data before making any moves. The BOJ is expected to stand pat on rates at the October meeting. 



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