The Japanese yen is showing limited movement on Friday. In the European session, USD/JPY is trading at 151.94, up 0.09%.

Tokyo Core CPI falls below BoJ’s target

Tokyo Core CPI, a leading indicator of inflation trends in Japan, fell to 1.8% y/y in October, down from 2% in September and just above the market estimate of 1.7%. This marked a second straight deceleration and was the lowest level since April. A key service inflation indicator also slowed in October, dropping from 2.7% to 2.6%, a four-month low.

The decline in inflation is a disappointment for the Bank of Japan, which wants to see inflation remain sustainable around its 2% target before its raises interest rates on the path towards normalization. The BoJ meets next week and is expected to maintain rates. The central bank will release growth and inflation forecasts which could provide insights into future monetary policy. The cautious BoJ is unlikely to raise rates until early next unless inflation reverses its current downtrend and pushes higher.

The US wraps up the week with core durable goods orders and UoM consumer sentiment. The manufacturing sector has contracted for four straight months and core durable goods orders are expected to fall 1% in September, after no change in August. The UoM consumer sentiment index is expected to fall to 68.9 in October, compared to 70.1 a month earlier. Consumers are unhappy about high inflation and there is uncertainty over the US election, with an extremely tight race between Donald Trump and Kamala Harris.

USD/JPY Technical

  • USD/JPY is testing resistance at 1.5207. The next resistance line is 152.58
  • 151.30 and 150.79 are providing support

 

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 [email protected]. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.