USD/JPY Dip To 141.50 Supported, Kanda Expects BoJ to Raise Its Inflation Forecast

USD/JPY sits virtually unchanged versus Friday NY closing levels, last near 141.70. Earlier lows were close to 141.50, although in latest dealings the USD has seen some support emerge against the majors. We had the Jibun preliminary PMIs out earlier, which were close to June outcomes. Top FX diplomat Masato Kanda was on the wires earlier stating that recent wage and inflation outcomes were overshooting expectations.

• Kanda added that the BoJ is likely to revise up its inflation forecasts on Friday, although wouldn't comment on monetary policy specifics.
• Kanda stated: ""It's become a shared view at home and abroad that changes are seen in Japan's corporate price- and wage-setting behaviour."
• An upward revision to the inflation forecast for the current financial year (which began in April) seems a strong likelihood at Friday's BoJ policy announcement. However, in the same report Reuters states the 2024 and 2025 (financial year) core inflation forecasts are expected to remain largely unchanged (see this link).
• Both Reuters and Bloomberg reported on Friday the BoJ was unlikely to tweak its YCC at Friday's meeting. Note prior to these reports USD/JPY was trading around the 140.20/30 region.
• Kanda also stated on Friday the authorities won't rule out any options in dealing with excessive volatility in the yen.