Article Highlights

  • Japan national core CPI down 0.5% vs. projected 0.4% drop
  • Tokyo core CPI down 0.4% vs. estimated 0.3% decline
  • BOJ core CPI fell from 0.8% to 0.5% in July
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The yen gave up some ground after Japan printed weaker than expected inflation readings, reminding forex junkies that the BOJ could still dole out more stimulus.

Major Events:

Japan’s inflation reports – CPI readings from Japan reflected weaker price pressures, reviving speculations of additional BOJ easing. The national core CPI showed another 0.5% drop versus the projected 0.4% decline while the Tokyo core CPI printed another 0.4% slump versus the estimated 0.3% dip.

Even the BOJ’s version of the CPI also indicated weaker inflation, as the figure fell from 0.8% to 0.5% in July. Components of the reports revealed that the slump was led by a sharp decline in prices of clothing and footwear, followed by weaker fuel and furniture prices.

Mixed equities performance –  Market participants refrained from committing to a particular direction ahead of the Yellen’s Jackson Hole Symposium testimony, leaving equity indices mixed. The Nikkei 225 index is down 1.09%, Australia’s S&P ASX 200 is down 0.5%, the China A50 index is up 0.09%, and the Hang Seng is up 0.22%.

According to China’s National Development and Reform Commission, the central bank has plenty of room to guide interest rates down, especially since low-tier reports released earlier in the session suggest that sentiment among small and large firms is weakening.

Major Market Movers:

JPY – The Japanese yen slid lower against most of its peers during the session after weak CPI readings were seen.

EUR/JPY is up from 113.43 to 113.53 (+0.09%), GBP/JPY climbed from 132.45 to 132.73 (+0.21%), AUD/JPY rose from 76.60 to 76.75 (+0.21%), NZD/JPY is up from 73.42 to 73.51 (+0.12%), but USD/JPY dipped from 100.58 to 100.40 (-0.18%).

Watch Out For:

  • 6:00 am GMT: GfK German consumer climate (10.2 expected, 10.0 previous)
  • 8:30 am GMT: U.K. preliminary GDP for Q2 (no change from 0.6% expected)
  • 8:30 am GMT: U.K. preliminary business investment q/q (-0.9% expected, -0.6% previous)

See more:

U.S. Session Recap

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