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 October month inflation data on early Friday 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). Other than the inflation data, the preliminary reading of Japan’s September month’s Industrial Production could also entertain the USD/JPY traders.

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 the Tokyo CPI ex-Fresh Food (YoY) figure decline further from -0.2% prior to -0.5% while signaling the headline Tokyo CPI data to ease from 0.2% (YoY) to 0.0% prior. It should be noted that the Tokyo CPI ex-Food and Energy figures may also drop from 0.0% previous readings to -0.3% on an annualized basis. However, the Industrial Production data is likely to recover from -13.8% earlier reading to -7.2% YoY in September.

How could Tokyo Core CPI affect USD/JPY?

Although the US dollar recently cheered the risk-off mood, the USD/JPY bears keep the reins around the monthly low. As a result, downbeat inflation figures can be ignored if Industrial Production manages to keep the yen bulls on the table. It should, however, be noted that the BOJ’s bearish bias can extend the pair’s latest pullback if both the scheduled data disappoint.

Technically, a clear break of the eight-day-old falling trend line, at 104.40 now, can direct short-term USD/JPY buyers towards the 105.00 threshold. Though, any further upside will be challenged by a three-week-long falling trend line, currently around 105.50. Meanwhile, fresh selling will wait for a clear downside break of the September month’s low of 104.00.

Key Notes

USD/JPY Forecast: Bouncing from the 104.00 threshold, bullish potential limited

USD/JPY trims losses and bounces up to 104.70

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.

About Japan’s Industrial Production

The Industrial Production released by the Ministry of Economy, Trade and Industry measures outputs of the Japanese factories and mines. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. A high reading is seen as bullish for the JPY, whereas a low reading is seen as bearish.