USDJPY is trading little changed today despite inflation data from Japan's capital, Tokyo, which may support the case for further interest rate hikes by the BOJ. On the other hand, weaker industrial and retail sales data are limiting gains on Japanese stock indexes. Despite this, the JP225 (Nikkei 225) index is still rising, supported by the positive session in the U.S., gaining 0.75% to 38,650 points.

Macroeconomic data from Japan:

  • 00:30 AM BST, Japan - August inflation data:

    • Tokyo CPI: current 2.6% y/y; previous 2.2% y/y
    • Tokyo Core CPI: current 2.4% y/y; forecast 2.2% y/y; previous 2.2% y/y

  • 00:30 AM BST, Japan - July labor market data:

    • Unemployment rate: current 2.7%; forecast 2.5%; previous 2.5%

  • 00:50 AM BST, Japan - July industrial production:

    • Industrial production: current 2.8% m/m; forecast 3.6% m/m; previous -4.2% m/m
    • Industrial production, 1-month forecast: current 2.2% m/m; previous 6.5% m/m
    • Industrial production, 2-month forecast: current -3.3% m/m; previous 0.7% m/m

  • 00:50 AM BST, Japan - July retail sales data:

    • Retail sales: current 2.6% y/y; forecast 2.8% y/y; previous 3.8% y/y

Core inflation in Japan's capital accelerated for the fourth consecutive month in August, remaining above the central bank's 2% target. The Tokyo inflation report serves as a leading indicator of nationwide trends. Therefore, the increase suggests a similar trend for all of Japan and supports market expectations for further interest rate hikes.

The higher readings were largely driven by the withdrawal of government subsidies for utility bills and rising rice prices due to heatwaves. According to national analysts, the inflation increase was caused by one-time factors, and the core inflation trend is expected to remain moderate in the coming months.

Source: xStation 5