Deflationary signs put pressure on BOJ to act soon

Japan's core inflation gauge slipped into negative territory for the first time since April 2013 last month, putting the Bank of Japan (BoJ) back at square one with inflation and placing greater pressure on the bank to act soon.

The national core CPI fell 0.1% year-on-year in August after showing no change in July, according to data published by the Statistics Bureau on Friday. Japan's core core CPI measure which excludes both fresh fruit and energy prices was up 0.8% year-on-year in August, coming in stronger than the forecast of a 0.7% increase, while Tokyo's CPI measure - released one month ahead of the other measures - fell 0.2% year-on-year in September, as expected.

The BoJ's most recent economic forecasts show that inflation is set to reach 1.9% in fiscal 2016, however, most economists are skeptical that this can be achieved without further easing by the central bank.

Pair is supported above 120.00 level and currently trading at 120.16 levels. It made intraday high at 120.38 and low 119.99 levels.