USDJPY Remains in Downtrend, As Japanese Inflation Jumps

Yesterday we saw some decent price action in the US session, with USDJPY rate jumping 1 cent to reach above 145, however the main trend remains bearish. Early in the Asian session, we had the CPI consumer inflation numbers from Japan, as well as a bunch of other data, such as the Unemployment Rate, Industrial Production and Retail Sales.

Japan CPI inflation for August posted a 4 point jump

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The USD has been gaining ground over the past two days, recovering some of this month’s earlier losses. In contrast, traditional safe-haven currencies like the Japanese Yen (JPY) and the Swiss Franc (CHF) have remained relatively subdued, particularly after the recent release of U.S. economic data. USD/JPY has shown significant movement, gaining around 100 pips yesterday following a 1-cent increase on Wednesday. Despite these gains, the overall trend for USD/JPY remains bearish, with moving averages on the H4 chart acting as resistance.

USD/JPY Chart H4 – MAs Pushing the Highs LowerChart USDJPY, H4, 2024.08.30 02:40 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

On the JPY side of the coin, the Yen is seeing some strength due to rising expectations of further interest rate hikes by the Bank of Japan (BoJ). BOJ officials have recently emphasized the BoJ’s readiness to adjust its monetary easing policy if economic conditions justify such changes. As a result, today’s release of Tokyo’s Consumer Price Index (CPI) data for August is highly anticipated. The market expects a stable inflation rate of 2.2%, excluding Fresh Food, which could provide further insight into the BoJ’s next moves.

Japan August CPI Consumer Inflation Report

Japan August CPI Consumer Inflation Report:

  • Headline CPI: 2.6% (up from 2.2% last month)
  • Excluding Fresh Food & Energy: 1.6% y/y (up from 1.1% last month)
  • Excluding Fresh Food: 2.4% y/y (versus 2.2% estimated and 2.2% in the prior month)

Japan Employment Report for July:

  • Unemployment Rate: 2.7% (up from 2.5% in June)
  • Job/Applicants Ratio: 1.24 (slightly above the expected 1.23 and previous month’s 1.23)

These figures indicate that inflation is rising faster than expected in Japan, with headline CPI jumping to 2.6% from the previous month’s 2.2%. Core inflation measures, excluding fresh food and energy, also show significant increases, suggesting broader price pressures. On the employment front, the unemployment rate ticked up to 2.7% from 2.5%, while the job-to-applicant ratio slightly improved, pointing to a still-tight labor market.

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Skerdian Meta
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Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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