The Asian economic calendar on 26 August 2025 features a limited number of events. The focus will be on Japan’s CSPI, also known as the services PPI, which provides insights into inflation within business services.<\/p>\n
This indicator, like many others in Japan, consistently exceeds the Bank of Japan’s 2% target. Market projections anticipate a rise of 3.2% for the current report, echoing previous trends in the country\u2019s inflation indicators.<\/p>\n
We are watching tomorrow’s Corporate Service Price Index from Japan closely. Another hot print, like the expected 3.2%, would add more pressure on the Bank of Japan to act more decisively. This isn’t just one number; it fits a pattern of stubborn inflation we’ve seen all year, well above the central bank’s 2% target.<\/p>\n
This persistent inflation challenges the Bank of Japan’s cautious stance on further rate hikes. The Bank’s policy rate, sitting at just 0.25% since the spring of 2025, looks increasingly unsustainable against service inflation that has consistently exceeded 2.5% since early 2024. We believe the market is underpricing the odds of another hike before the end of the year.<\/p>\n
For currency traders, this suggests a potential shift in the yen’s prolonged weakness. After being stuck in a 158-162 range against the dollar for much of the summer, the risk of a sharp move lower in USD\/JPY is growing. We see value in buying near-term JPY calls, as implied volatility seems too low for a central bank that may be forced to act.<\/p>\n
Equity derivatives are another area to watch, as a hawkish turn would be a headwind for stocks. With the Nikkei 225 up nearly 15% year-to-date and hovering near record highs, the market seems complacent about monetary policy risk. Buying protective puts on the index for the fourth quarter could be a prudent hedge.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Japan’s CSPI expected to rise 3.2%, highlighting persistent inflation above Bank of Japan’s 2% target.<\/p>\n","protected":false},"author":62,"featured_media":17038,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-29574","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t