The USD/JPY pair remains steady ahead of the unveiling of crucial economic data, including the US Consumer Price Index (CPI) figures and the release of the Federal Open Market Committee (FOMC) Minutes scheduled for Wednesday. As Asian trading unfolds, the pair lingers around 151.70.
The Japanese Yen (JPY) faces potential hurdles, as Bank of Japan (BoJ) Governor Kazuo Ueda underscores the central bank‘s stance on not adjusting monetary policy solely to address fluctuations in the foreign exchange (FX) market. Governor Ueda emphasizes the persistent deflation and subdued inflation levels in Japan, which have complicated efforts to influence public inflation expectations through monetary expansion. Given that trend inflation remains below the targeted 2%, maintaining accommodative monetary conditions is deemed essential to steer the economy towards achieving the inflation target.
Data analysis reveals that Japan’s Producer Price Index (PPI) saw a year-on-year uptick of 0.8% in March, aligning with expectations and marking an acceleration from February’s revised 0.7% increase. This constitutes the highest reading since October of the previous year. However, the monthly PPI figure saw a 0.2% increase, slightly below the anticipated 0.3%.
Meanwhile, the US Dollar Index (DXY) endeavors to hold its ground as it anticipates the forthcoming US CPI data and the FOMC Minutes later in the North American session.
Market projections suggest that the US headline Consumer Price Index is likely to pick up pace in March, whereas the core measure is anticipated to moderate. The US Dollar remains in a state of anticipation, poised for potential policy adjustments prompted by incoming data. A robust labor market performance observed last week could nudge the Federal Reserve towards a more hawkish stance should inflation exceed expectations.
