JPY: USD/JPY May Surge Past 150.90 February High due to Japan’s Easing Price Pressures: ING
Japanese CPI data for the month of January is scheduled tomorrow, expected reading is 1.8% it is down from the previous reading of 2.3%. So shifting from Easing to Tightening policy setups is more doubtful for Bank of Japan if CPI data printed at expected rate tomorrow. The JPY is weakness in the market against counter pairs ahead of this news.
ING Analysts Assess Yen Outlook Ahead of Japan’s January Inflation Data
As Japan prepares to release its January inflation data on Tuesday, economists at ING provide insights into the potential impact on the Japanese Yen (JPY) in anticipation of the Consumer Price Index (CPI) report.
The forthcoming Tokyo CPI numbers for January are projected to reveal a decline in both headline and core inflation to 1.9%, slipping below the Bank of Japan’s 2.0% target for the first time since March 2022.
USDJPY is moving in Ascending channel and market has rebounded from the higher low area of the channel
This development could lead to a reevaluation in the markets, with a potential shift away from pricing in a June hike.
JPY: Japan Inflation & BOJ Hike Prospects
Japanese CPI data for the month of January is scheduled tomorrow, expected reading is 1.8% it is down from the previous reading of 2.3%. So shifting from Easing to Tightening policy setups is more doubtful for Bank of Japan if CPI data printed at expected rate tomorrow. The JPY is weakness in the market against counter pairs ahead of this news.
BOJ’s CPI Report: Fading Inflation and Hike Uncertainty
The upcoming CPI report from the Bank of Japan (BOJ) is expected to reinforce the prevailing sentiment of prolonged ultra-easing. Initial expectations were that rising inflation might prompt a more hawkish stance, but recent months have seen a slowdown in price growth, raising doubts about the end of negative rates.
Anticipated Japan headline inflation is 2.1%, down from 2.6%, with a monthly rate slipping into deflation at -0.1%. Concerns arise as sluggish price growth appears linked to weak consumer demand, suggesting potential for further yen depreciation.
The core rate is projected to fall below the BOJ’s 2.0% target, making the case for tightening monetary policy challenging. Calls against maintaining ultra-easing have increased, with some, like ex-Cabinet advisor Etusro Honda, advocating for the continuation of negative rates.
The previously held notion that a weak yen would boost inflation by increasing imported goods’ costs has not materialized, given USDJPY’s rise above 150. This, coupled with global economic challenges, has left crude prices subdued.
Importantly, higher prices of imported goods haven’t translated into increased consumer spending, reflecting an overall lack of economic growth. The focus is now on spring labor negotiations, where higher wages are deemed crucial for sustaining consumer spending.
USDJPY is moving in Ascending channel and market has reached higher high area of the channel
Contrary to the optimistic outlook last year, the current economic scenario shows signs of contraction, with poor PMI readings and a reluctance among businesses to raise wages without growth prospects. The expected conclusion of the BOJ’s study on negative rates in March may not necessarily lead to a hike, given the challenges of falling inflation and a technically recessionary economy. The initial consensus for positive conclusions and a subsequent hike is now in doubt, contingent on a substantial turnaround in key economic indicators.
JPY: Nikkei Soars on Yen Decline Ahead of Japan’s CPI
Japanese CPI data for the month of January is scheduled tomorrow, expected reading is 1.8% it is down from the previous reading of 2.3%. So shifting from Easing to Tightening policy setups is more doubtful for Bank of Japan if CPI data printed at expected rate tomorrow. The JPY is weakness in the market against counter pairs ahead of this news.
Nikkei Hits Record High, Yen Weakens Ahead of CPI; BoJ Eyes Wage Negotiations
The Nikkei index reached a new peak today, indicating a strong risk appetite among Japanese investors, while the Yen faces downward pressure, particularly against European majors. Focus shifts to consumer inflation data in the upcoming Asian session.
The forecast for Core CPI, excluding food prices, suggests a slowdown from 2.3% to 1.8% in January, falling below the BoJ’s 2% target for the first time in nearly two years. Attention is on the core-core CPI (excluding both food and energy), with anticipation regarding whether it will decelerate from December’s 3.7%.
USDJPY is moving in uptrend line and market has reached higher low area of the pattern
Governor Kazuo Ueda emphasizes the importance of outcomes from this year’s wage negotiations in determining the timeline for phasing out the negative interest rate policy. Large businesses are set to conclude wage talks on March 13, just before the BoJ’s meeting on March 18-19. While some see March as a potential candidate for a rate hike, April, with new economic projections, appears a more likely window for policy adjustments.
Unexpected strength in the inflation report could trigger speculation about an earlier rate hike.
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