Core consumer price index (CPI) in Tokyo, used as an early indicator of nationwide figures due in around three weeks, rose 2.4% in March from a year earlier, matching a median market estimate and slowing slightly from a 2.5% gain in February. The other core measure, referred to as core-core that excludes fresh food and energy costs, and is interpreted as a broader price trend indicator, also slowed, coming in at 2.9% in March from 3.1% in February. Despite the slowing both are still well above the Bank of Japan 2% target rate.

Separate data on Japanese factory output showed a fall vs the rise expected.

If there is encouragement to be taken from today’s Japan data it was found in retail sales, these beat median forecasts and rose for a 24th consecutive month. Put above-target inflation together with better retail sales and the BOJ stays on a tightening course, though its expected to be slow.

USD/JPY responded by inching just a little higher. It had barely added 10 or so tics in more than hour when Japan’s finance minister Suzuki weighed in with regular verbal intervention. The rhetoric from Suzuki and other officials has been taken up to a more forthright level. Suzuki today included mentions of:

  • rapid FX moves
  • speculative moves
  • won't rule out any steps to respond to disorderly FX

USD/JPY backed off from its earlier high.

In other major FX moves were also subdued. We are heading towards the next session with holidays in the UK and Europe. It’s a holiday today also in the US and Canada, although we have Powell speaking and inflation data released.

usdyen wrap chart 29 March 2024 2