Japanese Inflation Data in Focus
Japanese Inflation Data in Focus
Early on Friday morning, we will have Japanese inflation data. This is going to be in key focus this week after Governor Ueda’s comments on Wednesday where he stated that the BoJ still had some distance to sustainably achieve the 2% inflation target. It may surprise you to realise that the Bank of Japan still has negative interest rates and is yet to recognise inflation as a problem for the Japanese economy. In fact, the prospect of the end of deflationary forces has been boosting Japanese stocks recently.
Japanese inflation to rise on Friday
The headline inflation print for Japan has been 3.2% y/y for May. Early on Friday, it is expected to come in at 3.5%.
The core reading is expected to come in at 3.3% vs 3.2% prior. So, both metrics are expected to tick up. The super core is expected to remain elevated at 4.2% y/y.
What to watch
If the headline comes in above maximum market expectations of 3.3% for the core, above 4.3% for the super core, and above 3.5% for the headline then investors will seriously question Ueda’s assessment from this week. That would likely result in speculation returning in earnest that the BoJ will need to exit its yield curve control policy. This should potentially strengthen the JPY. So, watch the USDJPY carefully over the inflation print as any big surprises to the upside could well strengthen the JPY. However, will the inflation data surprise markets, or will there be a consensus print? Release is out at 00:30 UK time on Friday morning.
About: HYCM is the global brand name of HYCM Capital Markets (UK) Limited, HYCM (Europe) Ltd, HYCM Capital Markets (DIFC) Ltd and HYCM Limited, all individual entities under HYCM Capital Markets Group, a global corporation operating in Asia, Europe, and the Middle East.
High-Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.
20230720
