When is Japan’s Tokyo inflation data and how could it affect USD/JPY?

Tokyo Core CPI overview

Japan’s Statistics Bureau will release the August month inflation data on early Friday morning in Asia, 23:30 GMT globally. While Tokyo Consumer Price Index (CPI) is considered to be the benchmark of price pressure in the Japanese economy, Tokyo CPI ex-Fresh Food, popularly known as Tokyo Core CPI, gains much love among Japanese Yen (JPY) traders as one of the favorite price measures for the Bank of Japan (BOJ).

The Japanese inflation data, otherwise mostly ignored, is likely to gain attention after the US Federal Reserve Chairman announced longer-term easing bias in Jackson Hole speech.

Forecasts suggest a mild consolidation in the Tokyo CPI ex-Fresh Food (YoY) figure of 0.4% to 0.3% while signaling an upbeat Tokyo CPI data of 0.8% (YoY) versus 0.6% prior. It should be noted that the Tokyo CPI ex-Food and Energy figures may also recede to 0.5% from 0.6% on an annualized basis.

How could Tokyo Core CPI affect USD/JPY?

Bank of Japan’s dovish tone, coupled with the government’s support for early money policy and a readiness to offer fiscal support, signals further rise of the USD/JPY pair if the scheduled data fail to please the Japanese yen (JPY) traders. However, the losses could be limited in a case of mild changes in price pressures. It should be noted, however, that market’s wish to retrace the previous day’s risk-on sentiment, amid challenges to the US-China trade deal and uncertainty surrounding the American fiscal stimulus, may guard the yen major’s short-term upside.

Technically, an upward sloping trend line from July 01, at 106.70 now, followed by a 100-day SMA level of 107, could keep exerting downside pressure on the quote. Though, sellers are less likely to be convinced unless the quote slips below the monthly support line, currently around 105.55.

Key Notes

USD/JPY reverses sharply and jumps to tests weekly highs above 106.50

About the Tokyo CPI ex Fresh Food

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.