The Japanese yen is showing little activity on Wednesday, as USD/JPY trades just below the 107-range in the European session. In Japan, Trade Balance disappointed on Tuesday, posting a larger deficit than expected. There are no Japanese releases on Wednesday. Over in the US, today’s highlights are CPI and Core CPI. The markets are keeping expectations low for the September readings.
Although US economic numbers have been strong overall, the lack of inflation remains a serious concern. Last week, PPI slipped to -0.1%, its first decline in four months. We’ll get a look at consumer inflation numbers on Wednesday, with the release of Core CPI and CPI. Soft figures would be an indication of weak consumer demand, which could hamper the US recovery.
On Monday, BoJ Governor Haruhiko Kuroda stated that Japan’s economy continues to improve modestly, although consumer demand has lessened since the consumption tax hike in April. The BoJ would prefer to stay on the sidelines, but there has been talk that the central bank could step in with additional stimulus if the economy takes a turn for the worse. Such a move would weigh on the already weak Japanese yen.
USD/JPY 106.94 H: 107.07 L: 106.79
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