When is Japan’s Tokyo Core CPI and how could it affect USD/JPY?

Tokyo Core CPI overview

Tokyo consumer price index (CPI) ex-fresh food, better known as Tokyo Core CPI, from Japan is up for release on early Friday at 23:30 GMT. The Statistics Bureau will soon release the April month inflation data that has much love among Japanese Yen (JPY) traders as one of the favorite price measures for the Bank of Japan (BOJ). 

Forecasts suggest no change in the YoY figure of 1.1%. Also, a bit broader version of the same inflation reading, namely Tokyo CPI, could soften to 0.8% from 0.9% on a yearly format. The reading comes from Japan’s largest populous city and signals an early indication of the national inflation figure, which gets released several weeks after the Tokyo reading.

How could Tokyo Core CPI affect USD/JPY?

With the recent downgrade of inflation and growth forecasts from the BOJ, investors may look towards the inflation numbers to validate the central bank’s predictions.

On the other hand, some of the BOJ members continue to support alteration of a 2.0% cap but have failed so far and hence a reading beneath the target could signal no change in the BOJ’s monetary policy easing. It should also be noted that majority of global central banks carry an easing or cautious monetary policy bias off-late, including the BOJ, which in turn gives less room to the hawks even if the inflation figure surprises to the upside. Though, short-term strength in the JPY can't be denied on upbeat data.

That said, USD/JPY failed to provide a closing break of 112.15/20 resistance-region but is around 200-day simple moving average (SMA) level of 111.55, a break of which can further extend the pullback in direction to 50-day SMA level of 111.30 and then to 110.80 marks including 100-day SMA. Meanwhile, a successful break of 112.20 can trigger the pair’s rally to 112.70 and 113.10 numbers to the north.

Key Notes

USD/JPY analysis: a batch of Japanese data to make it or break it

USD/JPY around the 200-DMA and markets look to key forthcoming data

USD/JPY Technical Analysis: Greenback back to 111.80 support

About the Tokyo CPI

The Tokyo Consumer Price Index released by the Statistics Bureau is a measure of price movements obtained by comparison of the retail prices of a representative shopping basket of goods and services, excluding fresh food. The index captures inflation in Tokyo. The purchasing power of JPY is dragged down by inflation. Generally, a high reading is seen as positive for the JPY.