Japan's Tokyo CPI: When is it and how will it affect the USD/JPY?

Japan's Tokyo CPI Overview

Japan's Tokyo Consumer Price Index will be dropping at 23:30 GMT and is a major bellwether of inflation for the Japanese economy. The Bank of Japan's (BoJ) primary focus has been to stoke inflation within the Japanese economy, having struggled with low inflation rates for years. 

Tokyo's CPI figures for March will be dropping the same time as the Industrial Production numbers for February and Japan's Unemployment Rate update for February as well.

The overall Tokyo CPI is expected to come in at 1.8 percent (prev. 1.4 percent), while Tokyo CPI excluding Fresh Food(CPI Core) is expected at 0.9 percent (prev. 0.9), and Tokyo CPI excluding both Food and Energy is expected at 0.5 percent, also in line with the previous figure.

Alongside the Tokyo CPI, Japan's Unemployment Rate for the month of February is expected to rise slightly to 2.6 percent from the previous 2.4 percent, while year-on-year Industrial Production figures for February is expected to decline to 2.4 percent from the previous period's 2.5 percent, with month-on-month figures expected at 5.0 percent versus the previous -6.8 percent decline.

How will the Tokyo CPI impact the USD/JPY?

Growing inflation is proving an elusive goal for the BoJ looking forward, and positive figures could see the Yen ease back from its strong position as the market's safe haven of choice amidst continuous risk aversion and turmoil, and with the BoJ consistently appealing to broader markets to let the Yen decline, a confident showing for Japanese inflation could counter-intuitively send the Yen lower as traders move out of the safe haven and into riskier assets, while a miss for the headline core figures will see the Yen bolstered as Asia traders pile back into their favourite risk haven.

Key notes on Yen ahead of CPI

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About the Tokyo CPI

The Tokyo Consumer Price Index released by the Statistics Bureau is a measure of price movements obtained by comparison of the retail prices of a representative shopping basket of goods and services, excluding fresh food. The index captures inflation in Tokyo. The purchase power of JPY is dragged down by inflation. Generally a high reading is seen as positive for the JPY.

About the Japanese Unemployment Rate

The Unemployment Rate which comes from the Ministry of Health, Labour and welfare and it's published by the Japan Statistics Bureau, is a measure of the percentage of unemployed in Japan. A high percentage indicates weakness in the labor market which influences the strength and direction of the Japanese economy. Therefore, a low percentage should be taken as positive or bullish for the JPY.

About the Japanese Industrial Production

The Industrial Production released by the Ministry of Economy, Trade and Industry measures outputs of the Japanese factories and mines. Changes in industrial production are widely followed as a major indicator of strength in the manufacturing sector. A high reading is seen as bullish for the JPY, whereas a low reading is seen as bearish.