The yen remained range-bound against the US dollar despite the release of better-than-expected Japanese inflation data for August. While US building permits missed estimates in August, housing starts surpassed expectations. Overall, the USD/JPY pair remained range-bound between 141.63 and 144.45 in the past day.
As per Japan’s Statistics Bureau, the country’s national core consumer price index (CPI), which is devoid of volatile fresh food but includes fuel expenses, rose by 2.80% y-o-y in August, following a 2.40% growth in the previous month, and a notch greater than the 2.70% rise anticipated by economists. The reported figure shows the quickest yearly rate of growth in almost eight years as surges in raw material costs and a weak yen fueled inflationary pressures.
According to economists, even though core consumer inflation has surpassed the Bank of Japan’s target level of 2% for five months in a row, the central bank may not lift benchmark interest rates in the foreseeable future as consumption and wage growth remain sluggish.
The increase in the countrywide core consumer price index (CPI), which is devoid of volatile fresh food but includes fuel expenses, was slightly higher than
The “core-core” index, which is devoid of both fresh food and energy expense, increased 1.60% y-o-y in August, following a 1.20% rise in July, and reflecting the quickest annual rate of growth since 2015.
Japan’s CPI increased to 3% in August, the highest level in over three decades, highlighting the issues consumers are facing from increasing living expenses. The world’s third-largest economy expanded 3.5% in 2Q22 and surpassed the preliminary estimate.
In the US, the Census Bureau stated that building permits declined to 1,517,000 units in August, from 1,685,000 units in the prior month, and missed the 1,600,000 units forecast by economists. The reported figure is 14.40% below the 1,772,000 units reported for August 2021.
Single-family authorizations were 899,000 units in August, a decrease of 3.50% from 932,000 units in July. The Census Bureau also stated that housing starts rose to 1,575,000 units in August, from 1,404,000 units in July. Economists did not anticipate any change in July’s figures. In August 2021, housing starts were at 1,576,000 units.
Single-family housing starts were 935,000 units in August, up 3.40% from 904,000 units in July.
Privately-owned housing completions were 1,342,000 units in August, a decrease of 5.40% below the July estimate of 1,419,000 units. The reported figure is 3.10% above 1,302,000 units in August 2021.
Single-family housing completions were 1,017,000 units in August, up 0.40% from 1,013,000 units in July.
The mixed economic data is expected to keep the USD/JPY pair range-bound in the short term. The currency pair’s trend will be determined by the US FOMC’s (Federal Open Market Committee) economic projections and benchmark interest rate, to be announced in the US session today.
Technically, the USD/JPY pair is trading above its ascending triangle, with its base acting as a major support. The pair is trading above its 50-day moving average while the MACD indicator shows a positive reading. We anticipate the pair to stay in an uptrend in the days ahead.
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