USD/JPY updates monthly highs above 144.00, while the US CPI grows at a slower pace

• USD/JPY quickly jumps above 144.00 as US inflation grew slower than expected.
• The risk profile remains positive as nominal US CPI growth will not be enough to force the Fed to further tighten monetary policy.
• The yen remains under pressure in the absence of support from BOJ policy.

The pair USD/JPY marks a new monthly maximum at 144.28 in the New York session after the publication of the United States inflation data for the month of July. The US Consumer Price Index (CPI) grew at a rate of 0.2% in July, similar to market expectations.

The annual Consumer Price Index (CPI) softened to 4.7%, while investors expected a flat 4.8%, while headline inflation rose slightly to 3.2% from the previous 3.0% release, but it remained slightly below the consensus of 3.3%.

The S&P 500 Index opens higher as nominal US inflation growth will not be enough to force the Federal Reserve (Fed) to further tighten monetary policy. In addition, investors digested Moody’s downgrade of small and medium-sized US banks. The credit rating company warned that it may downgrade some of the largest loans in the future. Moody’s argued that rising borrowing costs have affected banks’ funding potential and profitability.

The Dollar Index (DXY) is swinging wildly around 102.00 as investors assess inflation data for further guidance. The slower-than-expected rebound in US inflation and the slowdown in hiring could allow the Federal Reserve (Fed) to keep interest rates stable.

On the Tokyo front, the Yen remains under pressure in the absence of Bank of Japan (BoJ) policy support. Commerzbank analysts stated that even if the BoJ wanted to start a slow exit from its yield curve control with its current monetary policy that cannot be positive for the yen due to a lack of transparency.