Yen Edges Higher, CPI Data Eyed

USD/JPY traded with a bullish bias on Thursday, as participants resumed dumping the yen after a brief pause on Wednesday. Despite broader risk aversion, the spectre of widening Fed/BoJ policy divergence lent support to the pair.

• The rate last operates at Y128.29 after shedding 9 pips in early trade. A dip through Apr 20/19 lows of Y127.46/126.98 would support the bearish case, while bulls need a move through the 0.764 proj of the Feb 24 - Mar 28 - 31 price swing at Y129.44 before taking aim at the psychological Y130.00 number.
• Note that the Japanese government has upgraded both its overall economic assessment and its view of private consumption. The Japanese economy “shows movements of” picking up as the severe Covid situation “is easing,” the Cabinet office said, noting that private consumption also “shows movements of” picking up recently.
• In fiscal matters, NHK reported that the Japanese government is currently undertaking preparations re: lifting the cap of temporary gasoline subsidies provided to oil distributors to Y35/litre from Y25/litre.
• On the data front, it's all about the latest batch of CPI data today. Core inflation is expected to have picked up to +0.8% Y/Y, according to the median estimate in a Bloomberg survey.
• Looking further afield, focus next week turns to jobs data (Tuesday) as well as retail sales & flash industrial output (Thursday). In addition, the BoJ will announce its monetary policy decision on Thursday.