Japanese Yen: CPI, Industrial Production Unlikely To Raise BOJ Hike Prospects

The Japanese yen has been the main beneficiary of the build up of risk-averse sentiment throughout the financial markets, which has also pushed equity indices like the DJIA and Nikkei 225 lower. However, with trendline support for USDJPY looming near the 113.00 level, a plunge in the equity markets may be the only trigger for the pair to take on the August lows once again.

Fundamental data out of Japan has not been able to drive price action across the yen pairs for quite some time, and upcoming news is unlikely to be any different. Tokyo consumer price measures are anticipated to show that deflation still reigns for the ninth consecutive month, leaving the Bank of Japan no room to implement further rate normalization. Despite the tightness of the Japanese labor markets, wages have failed to rise and as a result, consumption growth has been extremely anemic. As a result, businesses simply do not have the ability to pass through any price increases to the consumer if they plan on actually selling anything.