The Japan Tokyo CPI Overview
Statistics Bureau of Japan will publish its data for January on Friday at 23.30 GMT. The Tokyo CPI measures the price fluctuation of goods and services purchased by households in the Tokyo region, excluding fresh food, whose prices often fluctuate depending on the weather. The index is widely considered as a leading indicator of Japan’s overall CPI, as it is published weeks before the nationwide reading.
The Tokyo CPI ex Fresh Food, Energy is expected to show an increase of 2.2% YoY in January versus 2.3% prior, while Tokyo CPI ex Fresh Food is projected to show a rise of 2.2% YoY during the same period, compared to 2.3% in December.
How could the Japan Tokyo CPI affect USD/JPY?
USD/JPY trades on a negative note on the day in the lead up to the Japan Tokyo CPI report. The major pair loses ground as the US Dollar (USD) weakens amid worries about the Federal Reserve (Fed) independence and concerns over another US government shutdown.
If data comes in hotter than expected, it could lift the Japanese Yen (JPY), with the first upside barrier seen at the 100-day Exponential Moving Average (EMA) of 154.22. The next resistance level emerges at the January 26 high of 155.35, en route to the January low of 155.68.
To the downside, the January 29 low of 152.68 will offer some comfort to buyers. Extended losses could see a drop to the January 28 low of 152.18. The next contention level is located at the October 28 low of 2025 at 151.76.
Economic Indicator
Tokyo Consumer Price Index (YoY)
The Tokyo Consumer Price Index (CPI), released by the Statistics Bureau of Japan on a monthly basis, measures the price fluctuation of goods and services purchased by households in the Tokyo region. The index is widely considered as a leading indicator of Japan’s overall CPI as it is published weeks before the nationwide reading. The YoY reading compares prices in the reference month to the same month a year earlier. Generally, a high reading is seen as bullish for the Japanese Yen (JPY), while a low reading is seen as bearish.
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Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Source: https://www.fxstreet.com/news/when-is-the-japan-tokyo-cpi-and-how-it-could-affect-usd-jpy-202601292235
