Yen Dips as Investors Await Key Inflation Data
The yen retreated on Thursday despite gains in the previous two sessions. USD/JPY climbed 0.57% to 151.83 during the European session.
Market participants are eagerly anticipating the release of Tokyo Core CPI data, a leading indicator of nationwide inflation trends.
For the month of November, economists are predicting a year-over-year increase of 2.1%, building on October’s 1.8% gain—the lowest reading since April.
Invitations are anticipating that the headline inflation rate in response, will climb to 1.9%
While Chief heredatory figures offer a mixed picture. These September’s 1.5% increase in Bank of Japan Core CPI surprised commentators with its modest growth after a 1.7% gain in September.
Economic Uncertainty Weighs on Market Sentiment
However, the services sector witnessed price surges of 2.9% up from 2.8% in September, surpassing expectations of 2.5%. If these increased Tokyo inflation figures emerge as expected, it could fuel speculation about a potential interest rate hike by the Bank of Japan at its December 19 meeting.
Despite the encouraging incumbencies, political uncertainties both domestically and internationally are weighing on markets. Prime Minister Ishiba, having lost his parliamentary majority in the October election, requires opposition support to pass a supplementary budget.
In the U.S., President-elect Trump’s threatened tariffs on international trade partners are raising eyebrows. Analysts anticipate a significant negative impact, particularly on Japan’s vital autosector, a core component of the country’s economy.
Meanwhile, during Wednesday’s trading session, U.S. GDP data (second estimate) validated the initial estimate of 2.8% growth for the third quarter.
This indicates robust economic activity spurred by strong consumer spending. While worries about a recession have diminished, the Fed signaling is undertaking gradual reductions.
USD/JPY TechnicalNibteonomics
USD/JPY is currently testing resistance at 151.60. Should it surpass this level, the next target lies at 152.75. The currency pair
保留 origen
bleed below these is expected to 149.97 and 148.82.
What factors might be contributing to the yen’s decline despite projections of positive inflation data?
## Yen Uncertainty: An Interview with Economist Dr. Sato
**Host:** Welcome back to Market Watch. Today, we’re discussing the recent dip in the yen despite strong performance earlier this week. Joining us is Dr. Sato, a leading economist specializing in Asian markets. Dr. Sato, thanks for being here.
**Dr. Sato:** It’s a pleasure to be here.
**Host:** So, Dr. Sato, the yen is down today, but analysts are expecting positive inflation data from Tokyo. Can you explain this apparent contradiction?
**Dr. Sato:** Absolutely. Market participants are always looking ahead, and while October’s inflation data for Japan was positive, showing a decrease to 2.5%, the focus is now on the Tokyo Core CPI data due for release shortly. [[1](https://tradingeconomics.com/japan/inflation-cpi)]Economists are forecasting a year-on-year increase of 2.1% for November, suggesting continued inflationary pressures.
**Host:** But wouldn’t positive inflation data strengthen the yen?
**Dr. Sato:** Typically, yes. Stronger inflation data often leads to a stronger currency as it indicates a robust economy. However, in this case, the market may be anticipating the Bank of Japan’s (BOJ) reaction to this data.
**Host:** You mean the BOJ might not raise interest rates even with continued inflation?
**Dr. Sato:** The BOJ has consistently maintained its ultra- accommodative monetary policy, despite rising inflation. They prioritize supporting economic growth over aggressively tackling inflation. Therefore, even if the Tokyo Core CPI data shows a 2.1% increase, the market might be factoring in the likelihood that the BOJ will stick to its current stance, leading to a dip in the yen.
**Host:** Dr. Sato, thank you for providing this insightful perspective. We’ll be sure to keep an eye on the Tokyo Core CPI data release and its impact on the yen.
**Dr. Sato:** My pleasure. I’ll be watching closely as well.