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Yen Prices Continue to Fall As BOJ Fights Deflation

Jason Shemtob

THE TAKEAWAY: Japan’s CPI figures show continued deflation in prices > Yen movement should continue to be led by BOJ policy > Yen Outlook: Bearish

Japan’s latest inflationary figures (YoY) came in at or around expectations, with the nation’s core CPI showing -0.9% growth in April versus expectations of -0.8% and -0.7% growth seen a month prior. The less volatile CPI measure, excluding Fresh Food and Energy, met expectations at -0.8% growth. The Yen did not react significantly to deflationary data, with the USDJPY at 99.33 as of this report.

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As with any other economic data coming out of Japan, the affect of the CPI on the Yen’s movement is minimalized by the “Abenomics” sentiment that surrounds the Japanese currency. The Yen is likely to remain held down by the Bank of Japan’s aggressive monetary policies, which are expected to continue in the long-term. That being the case, future CPI data (along with other economic measures) may be used as a signal for BOJ policymakers to adjust their stimulus efforts. In the short-term investors should focus on BOJ rate decisions and their accompanying commentary.

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