USD/JPY Extends Gains After U.S. CPI

USD/JPY pushed higher Tuesday as markets digested a considerable overshoot in U.S. CPI, which grew at the fastest pace since 2008. The rate extended its winning streak to three days in a row.

• PM Suga's cabinet drew criticism from the public and from within the LDP, once it emerged that ministers considered using financial institutions to enforce the ban on alcohol sales in Tokyo. Covid-19 response czar Nishimura suggested that the proposal to share the details of non-compliant eateries with lenders has been abandoned.
• Japan poured fuel on the geopolitical fire by including Taiwan in its official national security strategy, which drew the ire of China's Foreign Ministry. Tokyo released an annual white paper on the "Defence of Japan," noting for the first time that "the stability of the situation around Taiwan is important, not only for the security of our country, but for the stability of the international community." This comes after Dep PM Aso's comment last month that the U.S. and Japan would have to defend the self-governing island if it was invaded.
• Looking ahead, Japan's final industrial output comes out today, with BoJ MonPol decision due on Friday.
• USD/JPY last trades at Y110.60, barely changed on the day. Bulls look to a clearance of Jul 7 high of Y110.82, which would bring Jul 2 high of Y111.66 into play. Bears need a move through Jul 8 low of Y109.53, before taking aim at Jun 7 low of Y109.19.