Forex price action was a mixed bag of nuts during the Asian session, as low-yielders like the dollar and yen gained pips while the pound and comdolls took hits.
- Japan’s headline CPI (y/y) up by 0.4% as expected vs. 0.1% growth in March
- Japan’s national core CPI (y/y) up by 0.3% vs. 0.4% expected, 0.2% in March
- Japan’s “core core” CPI (y/y) down to 0.0%
- Tokyo’s core CPI (y/y) up by 0.1% vs. 0.0% expected, -0.1% previous
- Japan’s corporate services price index down from 0.8% to 0.7% vs. 0.9% expected
Japan’s inflation reports
Consumer prices in Japan edged up by 0.4% from a year earlier in April, which matches analyst expectations after a 0.1% uptick in March.
Meanwhile, the more closely watched core CPI grew by 0.3%, marking its fourth consecutive monthly increase and the highest levels since April 2015.
Unfortunately, the price increases were mostly due to lower energy prices, as evidenced by the “core core” reading clocking in a 0.0% growth for the month. Recall that the item takes away the impact of volatile food and energy prices.
Last but not the least is Tokyo’s preliminary CPI report for May printing a 0.1% growth when analysts had been expecting a 0.0% reading.
Overall, the numbers presented progress for consumer prices, but still suggests that it will be a while before the Bank of Japan (BOJ) hits its 2.0% inflation target.
GBP weakens on new election poll results
You read that right – polls are still a thing! Well, at least for the pound today.
A few hours ago polling agency YouGov’s survey ending on May 25 saw May’s Conservative Party cutting their lead down from 9 to 5 points against the opposing Labour Party. The Conservative Party now stands at 43% against the Labour Party’s 38%.
Recall that market players are expecting a landslide victory for May and her team in the June 8 general elections, which is a good thing if they want to negotiate for a smoother Brexit.
But now that their lead isn’t as solid, investors are starting to worry that the Brexit process might not be smooth after all. Somebody tell the BOE.
Major Market Mover(s):
Seems like the headline CPI reports are enough for the yen bulls, as the low-yielding currency gained across the board despite the tepid core inflation readings.
USD/JPY is down by 20 pips (-0.18%) to 111.60, EUR/JPY fell by 32 pips (-0.26%) to 125.01, AUD/JPY plummeted by 51 pips (-0.61%) to 82.85, and CAD/JPY dropped by 21 pips (-0.25%) to 82.73.
The new YouGov poll was bearish for the pound especially after the U.K.’s GDP was just recently downgraded.
GBP/USD fell by another 54 pips (-0.42%) to 1.2888, GBP/JPY plummeted by 84 pips (-0.58%) to 143.84, and EUR/GBP popped up by 27 pips (+0.31%) to .8690.
Watch Out For:
- No major reports on tap, but watch out for any G7 or NATO-related headlines that might move the major currencies!