Scotiabank strategists Shaun Osborne and Eric Theoret report USD/JPY is steady ahead of Tokyo Consumer Price Index (CPI), where consensus expects a pickup in both headline and core inflation into the mid-to-upper 1% range. Hawkish remarks from Bank of Japan (BoJ) officials, including guidance on a ‘neutral’ rate near 2%, contrast with the still-low policy rate. They warn spot remains uncomfortably close to 162, with little support seen before 160.

Yen steady as Tokyo CPI looms

"The yen is steady, entering Thursday’s NA session unchanged vs. the USD. There were no overnight releases and near-term risk lies with the 7:30pm ET Tokyo CPI data for June."

"Consensus is looking to an increase across both headline and narrower measures, rising from the lower/mid-1% range to the mid/upper-1% range. "

"Hawkish comments from the BoJ’s Tamura have added to Wednesday’s guidance from Gov. Ueda, suggesting a ‘neutral’ interest rate level at 2% (vs. the current policy rate at 1.00%)."

"For USDJPY, we remain uncomfortably close to the 162 level and suspect that MoF officials are closely eyeing the latest gains in spot."

"In terms of support, we see little ahead of 160."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)