According to FXStreet, the USD/JPY currency pair increased to nearly 145.20 this morning. This is the highest level in nearly three weeks, after Japan announced the Tokyo Consumer Price Index (CPI). Investors are awaiting US personal consumption expenditure (PCE) price index data for August, due later on Friday.
Tokyo's CPI rose 2.2% year-on-year in September, down from 2.6% in August, the Statistics Bureau of Japan reported. The CPI excluding fresh food and energy also increased 1.6% over the same period last year, similar to the previous announcement. Tokyo's CPI excluding fresh food increased by 2.0% in September, lower than August's 2.4% increase and in line with market expectations.
After the inflation data was released, the Japanese Yen (JPY) decreased slightly. Although inflation has slowed down, the Bank of Japan (BoJ) may still raise interest rates later this year if the economy continues to develop as expected. However, there are some concerns about the direction of Japanese interest rates, which could limit the increase of the JPY and help USD/JPY maintain the increase in the coming time.
BoJ Governor Kazuo Ueda recently said that the central bank is in no rush to raise interest rates and will wait for more data before making a decision. The BoJ is expected to leave interest rates unchanged at its October meeting.
Meanwhile, the US Federal Reserve (Fed) cut interest rates sharply last week and is expected to cut another 50 basis points (bps) before the end of the year. Fed Governor Lisa Cook said she supports cutting interest rates to reduce risks to the labor market. The Fed's dovish statements could weaken the US Dollar against the JPY in the short term.
Investors will closely monitor the US core personal consumption expenditure (PCE) price index for August, which is considered the Fed's preferred inflation measure, due out on Friday. If the index rises above expectations, the possibility of a Fed rate cut in November will decrease and that could help support the USD.
According to Lao Dong, at 7:00 a.m. on September 27, the exchange rate of the Japanese Yen against the US dollar is currently anchored around the lowest level of the day at 144.75 JPY and the highest at 145.45 JPY.
