Tokyo CPI overview
Late Thursday (Friday morning Japan time) at 23:30 GMT will see another round of Japan’s Tokyo CPI reading, and Japan’s inflation is expected to remain staunchly near the 1% level, far below the Bank of Japan’s target of “around” 2%. Although Tokyo CPI only comes from the single Japanese city, it is by far the largest populous within Japan’s borders, and acts as a fairly accurate bellwether of the national inflation figure, which gets released several weeks after the Tokyo reading.
How could it affect the USD/JPY?
Risk sentiment is the major market driver of the week, and although Japan’s inflation figures alone will not be enough to shift traders from one foot to the other, a significant miss to either side could see the Asian market session with a skewed risk barometer to close out the week, and according to FXStreet’s own Valeria Bednarik: “from a technical point of view, the pair is on negative ground, although with a limited downward potential, as in the 4 hours chart, it’s developing below a congestion of directionless moving averages, as technical indicators advance in bearish territory. Trading around 112.30, the pair needs to surpass the highs from the week right below 112.90 to get into positive ground and be able to extend its rally, while renewed selling interest below 111.85 should open doors for a steeper decline toward the 111.00 figure.”
Support levels: 112.15 111.85 111.60
Resistance levels: 112.90 113.20 113.50
Key notes
USD/JPY: risk sentiment leading the way for JPY
USDJPY Outlook: Risk of reversal after bears failed at key supports
USD/JPY Analysis: waits for a break-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.
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