Important Events Today:

12:30 UTC: USD – Core Personal Consumption Expenditures Price Index m/m.

The USD/JPY pair is trading around 161.00, its highest level since 1986, during the Asian session on Friday. Inflation by the Consumer Price Index (CPI) in Tokyo rose to 2.3% year-on-year in June, up from the previous period’s 2.2%. Tokyo’s core CPI inflation, excluding volatile food prices, also increased over the same period, reaching 2.1% year-on-year compared to the previous reading of 1.9%, exceeding the market’s median forecast of 2.0% year-on-year.

Japanese Finance Minister Shunichi Suzuki stated on Wednesday that he would “take appropriate steps regarding excessive currency fluctuations.” Suzuki refrained from commenting on specific currency levels or potential interventions but emphasized the importance of stable currency movements reflecting fundamental indicators. Chief Cabinet Secretary Yoshimasa Hayashi supported the Finance Minister’s stance.

The US dollar (USD) is strengthening due to the rise in US Treasury bond yields. The yields on 2-year and 10-year bonds are 4.72% and 4.30%, respectively, at the time of publication. Federal Reserve Board Member Michelle Bowman noted on Thursday that while current Fed policies should be sufficient to bring inflation back to target levels, the Fed should not shy away from further rate cuts if inflation data prove unstable.

On Friday, a decrease in the Personal Consumption Expenditures (PCE) Price Index annual inflation rate to 2.6% is forecasted from the previous 2.8%. This data is considered a preferred inflation gauge for the Federal Reserve (Fed). Market participants hope that signs of inflation easing will prompt the Fed to consider rate cuts sooner rather than later.

Recommendations: Trading predominantly with Buy orders from the current price level.