Talking Points
- Japanese producer prices came in about as expected in June
- There’s little sign of any pressure on consumer prices from this quarter
- The Japanese Yen continued to gain on the US Dollar after the numbers
What will drive the Japanese Yen through this year’s third quarter? New fundamental and technical forecasts from DailyFX are here.
The Japanese Yen continued to gain on a generally weaker US Dollar Wednesday, with an as-expected official look at producer prices adding little to the pace.
The Corporate Goods Price Index was flat on the month in June, for a 2.1% annualized gain. The on-month print was exactly as markets had expected but that on-year rise was above the 2.0% forecast. However, the data exactly match May’s showing and suggest that the consumer-price power which Tokyo would so much like to see is hardly likely to come from the wholesale sector. Indeed, the index itself has been stuck at 98.4 for three months straight.
Japanese consumer price inflation is running at an anaemic, 0.4% annualized rate. That’s far below the Bank of Japan’s 2% target which has been missed since 2015. It has not been higher than 0.5% for twelve months. Based on its own numerous pronouncements, the BoJ is thought likely to retain its current, ultra-loose monetary settings until consumer prices are not merely at target, but sustainably so, which probably accounts for the lack of Yen reaction to the data.
The US Dollar has been weakening since Tuesday’s New York session in which US President Donald Trump’s son released an email chain citing Russian support for his father before last year’s Presidential election.
--- Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX
