USD/JPY consolidates near 155.00 as traders await Japan CPI

The Japanese Yen (JPY) trades in a narrow range against the US Dollar (USD) on Thursday, with USD/JPY struggling to extend its recent gains despite a firmer Greenback, as traders adopt a cautious stance ahead of Japan’s inflation data due on Friday. At the time of writing, USD/JPY is hovering around 154.95 after briefly climbing above the 155.00 handle.

The Greenback gained traction across the board after resilient US economic data and a hawkish tone in the Federal Reserve’s (Fed) January Meeting Minutes tempered market expectations for imminent rate cuts.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is trading around 97.95, its highest level since February 6.

Data released earlier in the day showed Initial Jobless Claims fell to 206K for the week ending February 14, well below the 225K forecast and down from the previous 229K. The four-week moving average eased to 219K from 220K.

Meanwhile, the Philadelphia Fed Manufacturing Survey surged to 16.3 in February, beating expectations of 8.5 and improving from 12.6 in January.

The Fed’s meeting minutes, published on Wednesday, showed policymakers divided on the monetary policy path. Several participants suggested it would be appropriate to keep rates on hold for some time while assessing incoming data, while others noted that rate cuts could become appropriate later this year if inflation declines in line with expectations. Importantly, policymakers did not rule out future rate increases if inflation remains above target.

This suggests the Fed is not in a rush to lower borrowing costs, though markets continue to price in nearly two rate cuts this year. Attention now shifts to Friday’s US data docket, including the Core Personal Consumption Expenditures (PCE) Price Index, the advance estimate of fourth-quarter US Gross Domestic Product (GDP) and preliminary February Purchasing Managers Index (PMI) data.

In Japan, National Consumer Price Index (CPI) data will be closely watched for clues on the timing of the Bank of Japan’s (BoJ) next rate hike. According to a Reuters poll conducted between February 10 and 18, all 76 economists expect the BoJ to keep interest rates unchanged at its March meeting.

However, 58% of respondents, 43 out of 74, forecast the policy rate will rise to 1% by the end of June. Among the 44 economists who specified the timing of the next hike, June was the most popular choice at 36%, followed by April at 20%, while 34% expect a move in July.