USD/JPY remains steady near 153.50 with Tokyo CPI in focus

The US Dollar is gaining the upper hand against the Japanese Yen, with both currencies among the worst G8 performers this week. The pair trades near 153.50 at the time of writing, consolidating its recovery from three-month lows near 152.00, as the focus shifts to the Tokyo CPI reading, due later on the day.

The Yen went through a significant pullback on Wednesday, following comments by US Treasury Secretary Scott Bessent, who affirmed that Washington is pursuing a strong Dollar policy. Bessent also played down speculation about a US-Japan coordinated plan to support the Yen, a rumour that sent the pair tumbling last Friday. 

BoJ remains committed to higher interest rates

Previously, the Yen had been supported by the hawkish tone shown by the minutes of the Bank of Japan’s (BoJ) latest monetary policy meeting. The BoJ’s committee shared the scenario of rising inflationary pressures, a weak Yen, and wage growth, which paves the path for further monetary tightening.

In that sense, Tokyo Consumer Price Index (CPI), due later on Thursday, will be closely watched for confirmation of those theories. Consumer inflation in Japan’s capital eased to 2% year-on-year in December from 2.7% in November, and the market consensus for the core CPI suggests that price pressures moderated further in January, which, if confirmed, could add negative pressure on the Yen.

In the US, the main focus on Thursday will be on the US initial Jobless Claims, which are expected to have ticked up to 205k in the week of January 24, from 200k in the previous one. Apart from that, Factory Orders are expected to have bounced up in November, while, on the negative side, the deficit on goods and services trade is forecasted to have widened in November.