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The Japanese yen is experiencing a resurgence after experiencing early losses. The USD/JPY pairing soared up to an impressive 148.80, marking the highest scores seen in the previous three weeks. Having recuperated, the yen is currently standing at 148.10 in Europe, reflecting a minute decrease of 0.03%. Following a tempestuous week for the yen, which saw a dip of 2.1%, it is slowly approaching the crucial 150 level.
Japan's Core CPI Plunges to 2.3%
For the second month running, Japan's core inflation has showed signs of slowing down, moving to a 2.3% year-on-year rate in December. This matches market forecasts and is a slight decline from the 2.5% observed in November, marking the weakest inflation rate since December of 2022, indicating weakened inflationary pressures. Despite being above the Bank of Japan's (BoJ) stated target for 21 consecutive months, the BoJ has shown no inclination toward policy adjustment, insinuating that inflation has been prompted by cost-driving factors that are not sustainable above the 2% level.
Even so, analysts speculate a policy tightening measure from the BoJ, an action likely to trigger a leap in the Japanese yen's value. Every BoJ session has developed into an essential viewing occasion as anticipation grows for potential shocking revelations. The next BoJ meeting is set for the upcoming Tuesday, with expectations high for the continuation of the current policy settings.
Meanwhile, cautious tones have been struck by Atlanta's Federal Reserve President Rafael Bostic about rate policies. Bostic declared his belief that rate hikes won't likely occur until the third quarter and emphasized the importance of careful decisions to avert a possible situation of lowered rates, subsequently inciting inflation, and ensuing necessitated rate increases. In response to this, the Fed has pushed back on any anticipations of cutting rates in March. As a result, market odds for a March cut have dwindled to 54% from a previous 77%, based on the FedWatch tool provided by CME.
