Japanese yen plummeted as the Japanese CPI fell to 2.5% year on year in April from 2.7% in March.

The Japanese yen (JPY) fell further on Friday. Following the announcement of lower National Consumer Price Index (CPI) data by the Statistics Bureau of Japan. The annual inflation rate declined to 2.5% in April from 2.7% the previous month. Indicating the second straight month of reduction while still remaining above the Bank of Japan’s (BoJ) 2% target. This persistent inflation puts pressure on the central bank to contemplate additional policy tightening.

Japanese inflation is above the 2% target, putting the Bank of Japan under pressure to tighten policy further.

The Bank of Japan has highlighted that a virtuous cycle of persistent, stable achievement of its 2% price objective combined. With substantial wage growth, is required to normalize policy. Meanwhile, investors believe that the JPY’s continued weakness may force the BOJ to delay its next interest rate hike. In order to reduce the impact on living costs, according to Reuters.

The US dollar rose after stronger US PMI data suggested that the Fed may keep interest rates higher for longer.

The US dollar (USD) rises on hawkish sentiment surrounding the Federal Reserve’s (Fed) decision to keep interest rates higher for a prolonged period. This sentiment is supported by higher-than-expected Purchasing Managers Index (PMI) data from the United States (US). Which was issued on Thursday. Investors are expected to closely follow On Friday, keep an eye on the Michigan Consumer Sentiment Index to get a sense of American consumers’ sentiments toward their finances and income.

Daily Market Movers: Japanese Yen Extends Losses Following Softer CPI.

Japan’s Core CPI (YoY), which excludes fresh food but includes gasoline expenses. Increased by 2.2% in April, as forecast, declining for the second consecutive month after rising 2.6% in March.
The S&P Global US Composite PMI rose to 54.4 in May from 51.3 in April, its highest level since April 2022 and exceeding market estimates of 51.1. The Service PMI increased to 54.8, the most output growth in a year, while the Manufacturing PMI moved up to 50.9.
The CME FedWatch Tool predicts the The Federal Reserve’s implementation of a 25 basis point rate cut in September has decreased to 46.6% from 49.4% a day earlier.
On Thursday, the Bank of Japan reported that the number of Japanese government bonds (JGB) remained unchanged from the previous operation. Over a month ago, the BoJ reduced the number of 5-10 years it purchased in a scheduled operation.
Tensions have risen since Taiwan’s new president, Lai Ching-te, took office. According to Chinese state media sources, China has deployed a large number of fighter jets and carried out simulated strikes in the Taiwan Strait and surrounding groups of Taiwan-controlled islands.
Jibun Bank and S&P Global reported on Thursday that Japan’s Manufacturing Purchasing Managers Index (PMI) increased to 50.5 in May from 49.6 in April, achieving Market expectations are 49.7. This represents the first growth since May 2023. Meanwhile, the Services PMI declined to 53.6 from 54.3, representing the quickest expansion in eight months.
Japan’s 10-year government bond yield reached 1% this week for the first time since May 2013, pushed by traders’ growing expectations that the Bank of Japan will tighten policy further in 2024.