BoJ's interventions in recent days can best be described as ‘leaning against the wind’. But, at the moment, the wind continues to blow in the direction of a weaker Japanese Yen (JPY), Commerzbank’s FX analyst Volkmar Baur notes.
Inflation to fade away if the JPY stabilizes
“In addition to this week's disappointing services index, which showed a contraction in activity in May, the foreign trade figures were also unconvincing. One of the reasons for this was weaker imports, which does not bode well for a robust domestic economy. And last night's inflation was unchanged at 2.8% y/y, and actually rose slightly from 2.1% to 2.2% when fresh food and energy are excluded.”
“And momentum also picked up in June. However, core inflation remains below the central bank's target of 1.6%. And once we look at the details, an even more significant problem emerges. It is still mainly the prices of goods that are driving inflation, and not services as the Bank of Japan had hoped, which would indicate more "home-grown" inflation.”
Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.
Hot
No comment on record. Start new comment.