Japan\u2019s Tokyo Consumer Price Index (CPI) year-on-year fell to 1.4% in March. It was 1.6% in the previous reading.<\/p>\n
This means the annual rate of price growth in Tokyo eased in March. The data compares prices with the same month a year earlier.<\/p>\n
The dip in Tokyo’s core inflation to 1.4% is a key signal for us. It suggests the Bank of Japan’s goal of sustained 2% inflation is still out of reach. We anticipate the BoJ will therefore delay any further interest rate hikes in the second quarter of 2026.<\/p>\n
This policy stance should continue to weaken the Japanese Yen, especially as interest rate differentials with other major economies remain wide. We should look at long positions in USD\/JPY, as the pair has historically climbed when BoJ policy remains accommodative. Recent data showing Japan’s industrial production unexpectedly fell 0.8% last month further supports the case for a cautious central bank and a weaker currency.<\/p>\n
For the equities market, this environment is positive for the Nikkei 225. A weaker yen boosts the overseas profits of Japan’s major exporters, a significant component of the index. We saw this pattern clearly in the 2023-2024 period when the Nikkei surged over 40% while the yen depreciated.<\/p>\n
Therefore, we should consider buying call options on the Nikkei 225 index for the coming months. Implied volatility on these options is currently sitting near a six-month low of 15.2%, suggesting that the potential for an upside move is currently underpriced. This presents a favorable entry point for bullish strategies.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Tokyo\u2019s CPI inflation slowed to 1.4% year-on-year in March, down from February\u2019s 1.6% reading.<\/p>\n","protected":false},"author":103,"featured_media":17054,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-45924","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/45924","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=45924"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/45924\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17054"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=45924"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=45924"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=45924"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}