In my guide to what to watch for in the US CPI report, released yesterday:
- ICYMI: US CPI data due Wednesday, estimate ranges (and why it’s crucial to know them)
I emphasized that this had high priority implications for Japanese officials:
- The Japanese Ministry of Finance (and the Bank of Japan) will review it based on the prospects of intervention on the yen. If CPI surprises to the upside, this will boost USD/JPY buying and delay possible intervention to support the yen (at the margin).
And it’s playing out. Why would Japanese authorities stand in front of a freight train? USD/JPY easily rose above 152. And now it has attacked and surpassed 153.00. This is not just a weakening movement in the yen, but a strengthening movement in the US dollar.
This article was written by Eamonn Sheridan at www.forexlive.com.
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