USD/JPY refreshes four-week high above 134.00 as USD Index defends 102.00 support ahead of US CPI
|- USD/JPY has printed a fresh four-week high above 134.00 as investors have started turning cautious ahead of US inflation.
- US core inflation is expected to remain persistent amid robust demand for labor.
- Japanese firms are failing in hiking the prices of offerings amid weaker retail demand despite an increase in wage growth.
The USD/JPY pair has printed a fresh four-week high at 134.04 in the Asian session. The upside bias for the asset is the outcome of a recovery in the US Dollar Index (DXY) as investors have started turning anxious ahead of the release of the United States inflation data and the continuation of the Bank of Japan’s support to expansionary monetary policy.
The USD Index is attempting to defend testing of the 102.00 support as investors are routinely getting nervous ahead of US Consumer Price Index (CPI). The demand for US government bonds continues to remain choppy ahead of US inflation. The yields on 10-year US Treasury bonds are hovering around 3.43%.
Meanwhile, S&P500 futures have continued their sideways performance as investors are preferring a postponement of positions in equities ahead of the quarterly result season. Stock-specific action is highly likely in the S&P500 ahead.
Analysts at Wells Fargo expect, “After rising 0.4% in February, we look for the CPI to moderate to a 0.2% gain in March. With the initial surge in oil/gasoline prices stemming from Russia’s invasion of Ukraine a full year behind us, CPI when measured on a year-over-year basis should fall to 5.1% in March from 6.0% in February. However, another elevated reading in the core CPI is likely to indicate that the recent trend in inflation is little improved. Excluding food and energy, we look for the CPI to rise 0.4% and remain close to 5% on a three-month annualized basis.
On the Tokyo front, inflation expectations have been trimmed as the Producers Price Index (PPI) has been trimmed. Stagnant performance has been observed on a monthly basis as expected. While annual PPI softened further to 7.2% from the prior release of 8.0% but remained higher than the consensus of 7.1%. This conveys the inability of firms in hiking the prices of goods and services amid weaker retail demand despite an increase in wage growth.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.