The Japanese Yen gives up the big figure intervention won back
Japan delivered the inflation and labour data the Bank of Japan needs to move next month and the Japanese Yen is weaker for a fifth consecutive session.
Japan's economy provided the Bank of Japan with the inflation and labor data needed for an upcoming decision. The Japanese Yen weakened for the fifth straight day, with the Tokyo Consumer Price Index (CPI) showing 2% inflation excluding food and energy, and unemployment falling to 2.4% in August. USD/JPY reached the 160.00 level, the high of the day.
The policy board considered increasing rates in September, with a faster pace than the usual twice-yearly cadence. The Federal Reserve chair warned that inflation may not return to target levels, pushing futures towards a higher rate. The Bank of Japan will decide two days after the Federal Reserve's meeting. A move to 1.25% would not significantly change the borrowing dynamics between the two countries.
The July 31 intervention, the largest single-session Yen purchase, dragged the pair from just below 164.00 to the 155.00 area. The next resistance is at 161.00, with support at 160.00 and below 159.50. Bullish sentiment prevails, with a daily close above 160.00 confirming the break.
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