As the CPI did not slow down unexpectedly, speculation about the Bank of Japan’s policy revision resurfaced, leading to yen buying. However, it is unlikely that the Bank of Japan will make any changes to the YCC at next weekend’s meeting. Bank of Japan Governor Ueda has indicated that inflation is likely to ease this year and plans to continue monetary easing for some time.
Japan’s March consumer price index (core, excluding fresh food) was released this morning at +3.1%, unchanged from the previous month. Market forecasts had expected growth to slow to +3.0%. The core index, excluding fresh food and energy, rose by +3.8% from +3.5% in the previous month. While the government’s price containment measures against soaring energy prices are having an effect, other sectors such as food, health care and education are rising.
If it rose more than expected, I think there would have been even stronger yen buying, but it’s not so good because it’s almost an expected value.
However, the dollar/yen pair is expected to face a major resistance at 135.00, and the USD/JPY sell entry is based on this point.
