When is Japan’s Tokyo inflation data and how could it affect USD/JPY?


Tokyo Core CPI overview

Japan’s Statistics Bureau will release the September month inflation data on early Tuesday morning in Asia, 23:30 GMT globally. While Tokyo Consumer Price Index (CPI) is considered to be the benchmark of price pressure in the Japanese economy, Tokyo CPI ex-Fresh Food, popularly known as Tokyo Core CPI, gains much love among Japanese Yen (JPY) traders as one of the favorite price measures for the Bank of Japan (BOJ).

The Japanese inflation data, otherwise mostly ignored, is likely to gain attention as the Asian economic calendar is mostly silent while the BOJ is yet to give any strong signals to join the lines of the US Federal Reserve and the European Central Bank.

Forecasts suggest no change in the Tokyo CPI ex-Fresh Food (YoY) figure of -0.3% while signaling an upbeat Tokyo CPI data of 0.4% (YoY) versus 0.3% prior. It should be noted that the Tokyo CPI ex-Food and Energy figures may also recovery to 0.2% from -0.1% on an annualized basis.

How could Tokyo Core CPI affect USD/JPY?

With the recent correction in the US dollar, global traders are searching for extra clues ahead of the key event scheduled during the week. As a result, USD/JPY fails to extend the previous day’s halt to a five-day winning streak while taking rounds to 105.50/55. Given the recent risk-on sentiment, any further upside in the Japanese inflation data can help build the market sentiment and propel the USD/JPY further towards refreshing the monthly top. On the contrary, disappointment from the scheduled data will have a mixed response amid expectations of further easing from the BOJ and the coronavirus (COVID-19) resurgence, not to forget the market’s cautious sentiment.

Technically, a clear break of the one-month-old falling trend line, at 105.45 now, can continue to challenge the monthly peak surrounding 105.70. Also acting as an immediate upside barrier is the 21-day SMA level of 105.60. Meanwhile, odds of the pair’s drop to August month’s low near 105.10 have comparatively fewer obstacles.

Key Notes

USD/JPY Forecast: Consolidating gains, bulls hesitate

About the Tokyo CPI ex Fresh Food

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 purchase power of JPY is dragged down by inflation. Generally, a high reading is seen as positive for the JPY.

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