- USD/JPY gained bullish momentum and broke above 136.00 on Friday.
- US data showed that inflation as measured by the PCE index increased at a faster than expected rate in January.
- USD/JPY remains on track for its highest weekly close since early December.
Having passed European trading hours near 135.00, the USD/JPY gained bullish momentum in the early hours of the American session on Friday and reached its highest level since December 20 at 136.46. At the time of writing these lines, the pair is trading at 136.30, up 1.2% daily.
Inflation data fuels USD recovery
Earlier, incoming Bank of Japan Governor Kazuo Ueda had stated that the weak Japanese yen would support exports, inbound tourism and some service sectors. Ueda added that they would have to normalize monetary policy if inflation moves towards 2%. With data from Japan revealing that the core CPI national rose to 4.2% yoy in January from 4% in December, these comments did not help the yen gain strength.
In the second half of the day, the US Bureau of Economic Analysis reported that the annual Personal Consumption Price Index (CPI) rose to 5.4% in January from 5.3% in December (revised from 5 %). In addition, the core PCE price index, the Fed’s preferred inflation gauge, rose 0.6% per month and raised the annual rate to 4.7% from 4.6%.
Reflecting the positive impact of good inflation data on the dollar, the Dollar Index topped 105.00 for the first time since early January.
For its part, the yield on 10-year Treasury bonds rose to 3.95% after falling on Thursday, which was an additional drag on USD/JPY.
Technical levels to consider
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
