Technical Analysis

ForexLive Asia-Pacific FX news wrap: USD/JPY falls after Tokyo CPI rises

CPI rate in Japan’s capital Tokyo hit a 42-year high in January.
The inflation data from Tokyo is published about 3 weeks ahead of
nationwide CPI and serves as a guide to what to expect. The Bank of
Japan have insisted, over and over, that current high levels of
inflation in Japan are transitory only, driven by cost-push factors.
Indeed, the BOJ forecasts that inflation will begin to slow from
around September/October this year. Other DM central banks, of
course, also held onto the ‘transitory’ explanation only to
experience skyrocketing inflation and being forced into rapid rate
hike cycles.
reduction in easy BOJ policy are
expected by
many in the market
from some time after April, when Bank of Japan Governor Kuroda’s
term expires and a new Governor is appointed. If today’s jump in
Tokyo inflation is reflected in the nationwide data to come it’ll
increase the pressure even more on the BOJ to dial back its easy
monetary policy.

the region
we had data showing an improvement in the ANZ New Zealand business
survey. Its still showing deep pessimism just not so much as in the
previous survey.

also had Australian PPI data for Q4, which fell back a little from Q3
and is an encouraging sign that perhaps inflation has peaked. Earlier
in the week the Australian Bureau of Statistics released the latest
quarterly and monthly CPI data, which
scaled new highs to 7.8%
and 8.4% respectively. A slowing would be very welcome but both are a
long, long way above the top end of the Reserve Bank of Australia’s
2 to 3% target band for inflation. The Bank meet on February 7 and it
would seem they’d be ignoring their mandate were they
not to
raise the cash rate from its current 3.1% level. Pic is from the
front page of the RBA website and shows how far behind the RBA cash
rate is:

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