- Risk-selling continues to weigh over the USD/JPY pair in Asia.
- Japanese CPI bettered estimates but remains half-way to the BOJ’s 2 percent target at best.
- Japan revised down assessment of industrial output.
- The inflation data to reinforce dovish BOJ expectations.
The JPY is looking to extend overnight gains amid escalating US-China trade tensions and Italian fiscal concerns.
At press time, the USD/JPY pair is trading at 110.95, having clocked an 8-day low of 110.88 a few minutes ago.
Tokyo core consumer price index (ex-food, energy) for August came in at 0.6 percent year-on-year, beating the estimate of 0.5 percent. Further, CPI ex-food rose 0.9 percent, bettering the estimate of 0.8 percent. The headline figure also printed at 1.2 percent, well above the estimate of 0.8 percent.
Indeed, investors can take heart from the fact that all three inflation readings beat estimates. However, price pressures remain well below the Bank of Japan’s (BOJ’s) 2 percent inflation target, despite the labor market tightening (jobs-to-applicant ratio best since 1974). Further, Japan also revised down its assessment of industrial output today.
All-in-all, the data does little to change expectations that the BOJ is unlikely to scale back the massive stimulus anytime soon.
Still, the JPY is keeping the bid and could extend the gains if the US stock futures report big losses. At press time, the S&P 500 futures are down 0.10 percent. The anti-risk Japanese currency could find takes in Europe if Italy’s fiscal concerns weigh over the European stock markets.
USD/JPY Technical Levels
Resistance: 111.14 (50-day MA), 111.49 (Aug. 24 high), 111.83 (Aug. 29 high)
Support: 110.59 (July 26 low), 110.32 (100-day MA), 110.00 (psychological level)
Share
