Poor inflation data underscores the fragile nature of Japan's recovery

Japan reported new CPI figures earlier today which were largely in line with expectations. The headline rate fell 0.3% y/y after 0.1% decline in March.Excluding fresh food and energy, prices fell 0.3% y/y, the same rate as in March. 

If all food and energy were excluded, prices rose at a steady 0.7% pace. A different measure, which excludes fresh food and energy, shows prices rose 0.9%, slowing from 1.1% in March. It finished last year at a 1.3% pace, the peak (thus far). Japanese inflation numbers just went from bad to worse, some softness in the Yen could be expected as markets prepare for further easing by the BoJ.

Reuters reported headlines quoting government sources, 'Japan’s PM Abe is likely to announce a delay in the sales tax hike and will hold a meeting with finance minister Aso in coming days to discuss the same'. PM Abe to meet with Finance Minister Taro Aso on Sunday, and Natsuo Yamaguchi, head of coalition partner Komeito, on Monday, to decide how long to delay the tax hike, the sources said.

USD/JPY edged higher amid ongoing chatter that Japan’s PM Abe will soon announce delay in sales tax hike. But the pair soon erased gains and was trading at 109.62 at 1230 GMT.