The Japanese yen is getting pummeled at the start of the trading week.  In the North American session, USD/JPY is trading at 141.90, up 1.09%.

Will BoJ Core CPI continue its upswing?

Japan releases BoJ Core CPI, the Bank of Japan’s preferred inflation indicator later today. The indicator has accelerated for eight consecutive months, as inflation continues to move higher. National Core CPI, released last week came in at 3.6%, up from 3.0%. A higher-than-expected reading is unlikely to lead to any change in policy at the BoJ. Governor Kuroda has insisted that inflation is temporary and should peak around 3%.  The bank’s uncompromising stance, which has capped interest rates on Japanese government bonds, has resulted in the yen sliding about 20% against the dollar this year. Rather than stem the yen’s decline with interest rate hikes, the government has responded with massive currency interventions. Such unilateral moves are unlikely to have a lasting effect, with the Fed still aggressively raising rates and the US/Japan rate differential only getting wider.

Federal Reserve members have been delivering hawkish messages to the markets, in a coordinated response to the rash exuberance in the markets following the US inflation report. The Fed speak campaign has dampened risk appetite and dashed hopes of a Fed U-turn on rate policy, which has helped the dollar recover some of its recent losses. The Fed has long insisted that one or two reports showing weaker inflation is not proof of a trend, although the markets have gone in a tizzy whenever inflation has softened. The markets have priced in a 50-bp hike next month, although some Fed members have stated that a 75-bp move remains on the table.

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USD/JPY Technical

• USD/JPY has support at 141.55 and 140.70
• There is resistance at 142.74 and 144.20

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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

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• Source: https://www.marketpulse.com/20221121/usd-jpy-jumps-to-142-boj-core-cpi-next/