USD/JPY scaled a fresh one-month peak at the start of the new week in which inflation will again be in focus, with US CPI report for May due out on Friday.
A red-hot CPI reading would reinforce expectations that the Federal Reserve would tighten policy aggressively. A consensus of analyst estimates points that annual CPI inflation will probably remain steady at 8.3% in May.
The US Dollar Index was edging down 0.13% to 102.034 on Monday, after advancing 0.5% last week following positive manufacturing and employment data.
Meanwhile, Bank of Japan Governor Haruhiko Kuroda said on Monday a top priority was providing support to the economy, while he again pledged the central bank would maintain massive monetary stimulus.
According to Kuroda, unlike the Federal Reserve or the ECB, Bank of Japan is not faced with a trade-off between the need to curb inflation and support the economy, as inflation in Japan remains low and is driven by temporary factors such as higher raw material prices.
“Japan is absolutely not in a situation that warrants monetary tightening, as the economy is still in the midst of recovering from the pandemic’s impact,” Kuroda said in a speech, cited by Reuters.
“The BOJ will be unwavering in its stance of maintaining powerful monetary easing, so that recent changes such as a rise in inflation expectations … lead to sustainable price growth,” the BoJ Governor said.
Last week the Japanese currency retreated 2.9% against the US Dollar, which Barclays analysts attributed to a recovery in risk-sensitive assets, higher bond yields overseas and a surge in oil prices, raising concerns over Japan’s trade balance.
As of 7:58 GMT on Monday USD/JPY was inching down 0.04% to trade at 130.761. Earlier in the trading session the major Forex pair climbed as high as 130.99, which has been its strongest level since May 9th (131.35).
USD/JPY has risen 1.68% so far in June, following a 0.96% drop in May.
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 130.49
R1 – 131.30
R2 – 131.79
R3 – 132.59
R4 – 133.40
S1 – 130.01
S2 – 129.20
S3 – 128.72
S4 – 128.23