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USD/JPY slips as Tokyo inflation supports yen, recovery seen limited

Core Tokyo inflation rose to 2.7% in September, and the Bank of Japan meeting outlook was less hawkish than expected, leaving USD/JPY exposed to US rate pressure.

Reported · Written up by our desk · Major Pairs

USD/JPY edged lower to 157.94 on Friday after a sharp rise the previous day, as the yen drew support from Tokyo inflation data, Action Forex reports. Core inflation in Tokyo accelerated to 2.7% in September, rising above the Bank of Japan’s 2% target for the first time in nine months.

At the same time, the Bank of Japan’s summary of opinions from its September meeting was less hawkish than expected, keeping uncertainty around the timing of any further policy move. The BoJ remains focused on risks of inflation running above target, which leaves the prospect of another rate hike before year end on the table, though it did not give a clear timing signal, Action Forex adds.

Despite that support, the yen is still on track for a third consecutive weekly decline as a strong US dollar and elevated US Treasury yields continue to weigh on the currency. Expectations that the Federal Reserve may keep raising rates, along with an interest-rate differential that could stay wide if the Fed tightens faster than the BoJ, limits the yen’s potential for sustained strengthening, the outlet says.

Latest closeUSD/JPY 157.40 ▲0.0%

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