Japanese Yen Bounces After Falling on CPI & Risk Appetite

The Japanese yen fell intraday, dragged down by underwhelming domestic macroeconomic data and the positive market sentiment. Yet the currency has bounced by now as the impact of risk appetite seemed to wane.

The Bank of Japan reported that the Consumer Price Index rose 0.5% in April from a year ago. That was a slower pace of growth than 0.6% predicted by analysts and 0.7% registered in the previous month.

Bank of Japan Governor Haruhiko Kuroda was speaking at a semi-annual testimony to the parliament today. Kuroda signaled that the central bank will telegraph an exit plan from its extra-loose monetary policy if inflation picks up:

We will communicate specifics on how we plan to exit once inflation accelerates toward 2 percent and conditions for hitting our target gradually fall into place.

At the same time, he stated that it is too early to consider stimulus exit:

For now, we don’t think conditions are rife to consider specific timings for an exit. The BOJ won’t end its ultra-easy policy before inflation reaches 2 percent.

USD/JPY slid from 111.04 to 110.91 as of 12:49 GMT today. EUR/JPY was up from 130.85 to 131.35 before retreating to 130.75. GBP/JPY traded near its opening level following the intraday rally from 149.02 to 149.72.

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