Scotiabank warns Japanese authorities may act as the yen weakens further ahead of Tokyo CPI data expected to show inflation pickup.
USD/JPY holds near 162, a level where Japanese officials may consider intervention, as Tokyo CPI data looms. Consensus forecasts headline and core inflation to rise into the mid-to-upper 1% range, up from prior levels.
Bank of Japan officials have signaled a ‘neutral’ interest rate near 2%, contrasting with the current 1.00% policy rate. Hawkish remarks from Governor Ueda and board member Tamura add to expectations of tighter policy.
Scotiabank strategists note limited support for the yen before 160, with spot gains drawing scrutiny from Japan’s Ministry of Finance.