Tokyo CPI overview
Japan starts the late week action early, with Japan’s Tokyo Consumer Price Index (CPI) for June, due late on Thursday at 23:30 GMT. The year-on-year Core Tokyo CPI is expected to bump slightly higher, forecast to come in at 0.6% versus the previous reading of 0.5%. Tokyo CPI is used as a bellwether indicator of the national inflation measures, which are released several weeks after the Tokyo measure.
Alongside the Tokyo CPI reading will be Japan’s Unemployment Rate and Jobs/applicants Ratio, with both measures expected to remain steady at their previous figures of 2.5% and 1.59, respectively.
Inflation has been the constant, yet evasive target of the Bank of Japan (BoJ) for years, who are embroiled in a hyper-easy monetary policy structure, but continuous easing and a rock-bottom unemployment rate has seen little movement in wages growth or price inflation, and dissenters are slowly growing more vocal within Japan, and even the BoJ itself, as people begin to question the efficacy of such an easy policy stance.
How could it affect the USD/JPY?
The US Dollar has been bumping higher against the Yen this week in halting bounds, marking in consistently fresh daily highs before falling back late in the US session, and with key inflation figures still slumped far below the BoJ’s lofty 2% target, directional bias remains firmly in the hands of the Greenback, and as FXStreet Chief Analyst Valeria Bednarik noted, “technically, the pair is close to the mentioned weekly high, pressuring a resistance area, and the 4 hours chart presents a neutral-to-positive stance, although the buying interest seems to have somehow decreased, as it has stabilized above a key Fibonacci level and its 100 and 200 SMA, while technical indicators have lost directional strength, now stable within positive readings.”
Key notes
Why a retest of the 2018 low should not be ruled out
About the Tokyo CPI
The Tokyo Consumer Price Index released by the Statistics Bureau is a measure of price movements obtained by comparison of the retail prices of a representative shopping basket of goods and services, excluding fresh food. The index captures inflation in Tokyo. The purchase power of JPY is dragged down by inflation. Generally a high reading is seen as positive for the JPY.
About the Japanese Unemployment Rate
The Unemployment Rate which comes from the Ministry of Health, Labour and welfare and it’s published by the Japan Statistics Bureau, is a measure of the percentage of unemployed in Japan. A high percentage indicates weakness in the labor market which influences the strength and direction of the Japanese economy. Therefore, a low percentage should be taken as positive or bullish for the JPY.
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