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USD/JPY jumps as BoJ Core CPI stalls

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The Japanese yen is sharply lower on Wednesday. In the North American session, USD/JPY is trading at 144.49, up 0.89% at the time of writing.

BoJ Core CPI remains unchanged at 1.8%

The Bank of Japan is expected to raise interest rates and continue on the path to normalization. The BoJ lifted rates out of negative territory in March but rates are barely above zero and the markets are expecting further hikes, although the timing remains unclear. This has made the BoJ an outlier among the major central banks, which have lowered rates in response to falling inflation.

In Japan, inflation has been on the rise and hit 3.0% in August after running at 2.8% in the prior three months. The BoJ has signaled that it will raise rates but has been cautious, and Governor Ueda said on Tuesday that the central bank can afford to wait and is not in any rush to hike rates.

The US Conference Board consumer confidence index is usually not a market-mover but a very soft reading on Tuesday sent the US dollar lower against most of the major currencies. The index slipped to 98.7 in September, down sharply from a revised 105.6 in August and below the market estimate of 103.8. The US labor market has deteriorated and consumers are worried about job security.

The US releases GDP (third estimate) for the second quarter with a forecast of 3.0%. This would confirm the second estimate and point to stronger economic growth after a 1.4% gain in the first quarter. Still, the Fed may be planning another jumbo rate cut – the markets have priced in a 50-basis point cut at the next meeting in November, according to CME’s FedWatch.

USD/JPY Technical

  • USD/JPY has pushed above resistance at 143.67 and 144.23. Above, there is resistance at 145.23
  • There is support at 142.67 and 142.11

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.
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