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USD/JPY surpasses 135.00 as DXY gains in advance of US Inflation
The USD/JPY is exhibiting a balanced profile above 135.00 as pre-inflation fear has impacted risk appetite. The US CPI may decline to 8.7%, but the core CPI is anticipated to rise to 6.1%. Japan reshuffles its government to keep the yen bulls on edge.
During the Asian session, the USD/JPY pair is surging northwards to reclaim its two-week high at 135.58. Monday's occurrence of numerous bids near 134.50 prompted the asset's price to become positive. The USD/JPY pair's two-day consolidated action indicates that market investors await the release of the US Consumer Price Index (CPI) with skyrocketing concern.
This time, the occurrence of the US inflation report is of utmost importance, as investors anticipate a decline in price pressures. The investment community is cognizant of the fact that the Russia-Ukraine conflict precipitously pushed up oil prices, which remained crucial to global cost pressures.
In July, the black gold remained weak, and a more than 11% decrease in oil prices reduced inflation projections. According to the market estimate, the inflation rate will fall to 8.7% from 9.1% previously. However, the core CPI, which excludes oil and food products, is expected to be higher at 6.1% compared to 5.9% previously reported. The demand for durable goods appears to be rebounding sharply. In the meantime, the US dollar index (DXY) aims to surpass the immediate barrier of 106.40.
The reshuffle of Japan's cabinet has the yen bulls dancing in Tokyo. This week's cabinet reshuffle will likely result in the retention of Finance Minister Shunichi Suzuki by Japanese Prime Minister Fumio Kishida. Now, all eyes will be on the steps taken by the Japanese government to increase the labor cost index, which is crucial for maintaining an inflation rate above 2%.
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