USD/JPY flows: Tokyo CPI Rebounds

Following a dip below 2% in January, the Japanese Tokyo CPi rebounded in February. Headline y/y CPI came in at 2.6% from prior 1.8%, ex-Fresh Food 2.5% from prior 1.8% and ex Fresh Food & Energy 3.1% from prior 3.3%. Both the headline and ex fresh food see a significant rebound while ex fresh food and energy continues to moderate. The data echoes our forecast to see a rebound in Q1 2024 before further moderation throughout the year. While in a short run, the data may affect sentiment, the key factor remains in labor cash earning to see a sustainable trend.

Thus, USD/JPY sees little impact and is trading 0.02% lower at 150.48 and a small range for this Asia session as both U.S. Treasury and JGB yields slip.