USD/JPY Trims Losses, Tokyo CPI and PCE in Focus
The Japanese yen pared losses against the US dollar in European trading on Thursday (May 28), but USD/JPY remained near an area considered sensitive to potential intervention by Japanese authorities. The pair traded around 159.45 after briefly touching 159.65, and remained near the 160.00 level, often considered a "red line" for Tokyo.
The dollar briefly strengthened in the Asian session after the renewed US-Iran escalation dampened market confidence in a swift opening of the Strait of Hormuz. Rising US Treasury yields also supported the dollar, while oil rebounded from lows, adding pressure on the yen through energy costs for Japan, a net importer.
Entering the European session, market tensions eased slightly, and the dollar corrected against major currencies. Investors' focus now shifts to the US PCE release scheduled for today, with April inflation expectations rising again and providing ammunition for the Fed's hawks to maintain a tighter policy bias.
In Japan, Bank of Japan Governor Kazuo Ueda warned that an initially temporary energy shock could become persistent if it spills over into wages, inflation expectations, and pricing behavior. This statement maintained market expectations that the BoJ could resume policy normalization after its June 15 meeting, although market participants are still awaiting the release of the Tokyo CPI today to confirm the direction of domestic price pressures. (Arl)
Source: Newsmaker.id
