USD/JPY shows resilience as it approaches 159.10 during the early Asian session on Friday. Japan’s core CPI inflation has decreased to a four-year low in April. FOMC Minutes indicated widespread backing for a Federal Reserve rate increase should inflation continue to be a concern. The USD/JPY pair advances to approximately 159.10 in the early Asian session on Friday. Softer Japan inflation data exerts pressure on the Japanese Yen relative to the US Dollar. The US May Michigan Consumer Sentiment Index report is set to be released later on Friday.
Data released by the Japan Statistics Bureau on Friday indicated that the National Consumer Price Index increased by 1.4% year-over-year in April, down from 1.5% in March. Meanwhile, Japan’s core CPI increased by 1.4% year-over-year in April, representing the slowest annual rate in four years. However, expectations indicate that inflation will accelerate in the coming months, as elevated oil costs and supply disruptions caused by the Middle East conflict prompt firms to raise prices for a broad range of products. The Japanese Yen experiences a slight decline following the release of a weaker inflation report.
The data is one of the elements the Bank of Japan will examine at June’s policy meeting, where the board is largely anticipated to increase its short-term policy rate to 1.0% from 0.75%. Minutes from the April Federal Open Market Committee meeting, released on Wednesday, indicated that a majority of Federal Reserve officials cautioned that the central bank may need to contemplate increasing interest rates if inflation remains consistently above their 2% target. The minutes underscored the escalating apprehension among Fed officials regarding inflationary pressures stemming from the Iran war.