Japanese yen has remained calm following the announcement of mixed inflation data.
The Japanese yen (JPY) stays stable following the announcement of the most recent inflation statistics on Friday.
Japan’s National Consumer Price Index remained at 2.8% in June, its highest level since February.
Japan’s National Consumer Price Index (CPI) maintained steady at 2.8% in June, maintaining the previous month’s figure and remaining at its highest level since February. Meanwhile, core CPI inflation increased to 2.6%, slightly higher than the previous data of 2.5% but somewhat below the consensus projection of 2.7%.
Japan’s 10-year government bond yield currently stands at About 1.04%, up from three-week lows. This bounce comes after Digital Minister Kono Taro told Bloomberg that the Bank of Japan (BoJ) should hike interest rates again in July to strengthen the yen. Additionally, the BoJ is expected to reveal its bond purchase tapering plans this month.
US dollar sustains its gains despite Fed dovish policy.
The USDJPY pair has fallen by up to 4% from its 38-year high of 161.95 in July. Analysts blame the drop to Japanese government actions. Traders remain concerned about the likelihood of additional interventions.
The US Dollar benefits from a small increase in US Treasury yields. However, the dollar’s gain potential may be limited as weaker labor data boost market expectations of a Federal Reserve (Fed) rate drop decision in September.
Daily Market Movers: Japanese Yen stands firm in the face of an intervention threat.
Japan’s CPI inflation, excluding food and energy prices, ticked up in June, rising 2.2% YoY from the previous 2.1%.
US Initial Jobless Claims surged more than expected on Thursday, with 243K new unemployment benefits applicants for the week ending July 12 compared to the predicted 230K and beyond the prior week’s corrected 223K.
Japan’s Merchandise Trade Balance Total for the year ended in June increased to a surplus of ¥224 billion against an expected deficit of ¥240 billion and ¥-1,220.1 billion previously.
On Wednesday, Fed Governor Christopher Waller stated that the US central bank is ‘coming closer’ to cutting interest rates. Meanwhile, Richmond Federal Reserve President Thomas Barkin remarked that lowering in inflation had begun to widen, and he wanted to see it continue, according to Reuters.
According to Reuters and Kyodo News, Japan’s top currency diplomat Masato Kanda stated on Wednesday that he would have to respond if speculators caused “excessive” fluctuations in the currency market and that there was no limit to how frequently authorities may intervene.
During an interview with Bloomberg News on Tuesday, Donald Trump warned Fed Chair Jerome Powell not to lower US interest rates before the November presidential election. However, if re-elected, Trump has stated that he will let Powell to finish his term provided he continues to “do the right thing” at the Federal Reserve.
Bank of Japan (BoJ) entered the foreign exchange market for consecutive trading.
Data released on Tuesday showed that the Bank of Japan (BoJ) entered the foreign exchange market for consecutive trading. Days last Thursday and Friday. The BoJ’s current account balance data, posted on Tuesday, suggests an anticipated liquidity drain of around ¥2.74 trillion ($17.3 billion) from the banking system on Wednesday due to different government sector activities, according to Nikkei Asia.
Fed Chair Jerome Powell stated earlier this week that the three US inflation readings this year “add somewhat to confidence” that inflation is on track to meet the Fed’s target sustainably, implying that a transition to interest rate decreases is not far off.
