The yen remained pinned near 158.00 as cheaper crude and a softer dollar elsewhere failed to shift USD/JPY on Tuesday. The pair slid from around 158.50 to the session low before retracing about half the move, leaving it trading much as it has through most of October. Bank of Japan Governor Kazuo Ueda told parliament that underlying inflation is very close to the 2% target, yet swaps imply less than a 5% chance of a rate rise from 1.25% on 30 October, while pricing around an 80% chance for 18 December. Separately, the finance ministry reiterated on 15 October that Japan stands ready to act in the currency market again; Tuesday’s high just above 158.50 was the strongest since that warning but failed to hold.
Upcoming Japanese Economic Data
Attention turns to Japan’s September trade data at 23:50 GMT on Tuesday, with exports forecast to rise 20.1% year on year after 19.3%. National CPI excluding fresh food is due at 23:30 GMT on Thursday and is seen at 2.1% after 1.7%, straddling the BoJ’s 2% goal.
US Data and Technical Outlook
In the US, University of Michigan one-year inflation expectations are forecast unchanged at 4.7% on Friday, while the five-year measure is seen at 3.5%, ahead of the Fed’s 28 October decision. On the chart, every daily close since 1 October has been within 75 pips of 158.00, with the 50-day EMA nearby; the 200-day EMA sits just above 157.50, and October has ranged from just under 157.00 to just under 159.00.
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