Japanese consumer price inflation likely to have accelerated moderately in July

The Japanese headline consumer price inflation data for July is set to release tomorrow. According to a Wells Fargo research report, the headline inflation is likely to have accelerated modestly in July. The overall CPI is expected to have risen to 0.9 percent year-on-year in July reflected a similar acceleration seen in Tokyo’s July CPI, while the closely followed CPI excluding fresh food measure is expected to have risen by 0.9 percent year-on-year.

While Japan’s inflation has risen gradually in the past several quarters, and there have even been signs of stronger wage growth, the pace of inflation has levelled out in recent months. During its July monetary policy announcement the Bank of Japan had stated that it “intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time”, and lowered its CPI forecasts, even as it permitted for greater variability in 10-year government bond yields.

“Even if there is a modest uptick of inflation, Bank of Japan policy will likely remain on hold for some time”, added Wells Fargo.

At 21:00 GMT the FxWirePro's Hourly Strength Index of Japanese Yen was highly bearish at -102.935, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 28.83. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex