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USD/JPY scales 12 1/2-month peak ahead of key US CPI report

The USD/JPY currency pair scaled a fresh 12 1/2-month peak on Monday ahead of the key US CPI inflation report, which could provide more clues over whether the Federal Reserve has done enough to curb price pressures.

US headline CPI inflation is expected to have ticked up 0.1% month-over-month in October, according to market expectations, after another 0.4% rise in September.

And, US core consumer prices probably rose 0.3% month-over-month in October, which would match the increase rate in September.

The official data will be released at 13:30 GMT on Tuesday.

“Even if we’re treated to a softer CPI print, the Fed are likely to continue to push back against hopes of rate cuts as it’s not in their interest to even think about cutting rates, let alone mention it whilst inflation remains above target,” Matt Simpson, senior market analyst at City Index, was quoted as saying by Reuters.

The Japanese Yen has also been pressured by rising US bond yields.

The yield on benchmark US 10-year Treasury Notes was last at 4.654%, after rising above 5% in October.

According to Tony Sycamore, market analyst at IG, a hot data print from the United States this week “would certainly do the trick” in driving the USD/JPY pair to the 152 range.

“Alternatively, a continuation of the more supportive risk backdrop would likely entice carry buyers to add to positions and test the measure of the (Bank of Japan),” Sycamore said.

As of 8:48 GMT on Monday USD/JPY was edging up 0.21% to trade at 151.795. Earlier in the session, the major Forex pair went up as high as 151.854. The latter has been the pair’s strongest level since October 21st 2022 (151.944).

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