Ella 
The yen (JPY) fell despite Tokyo’s consumer price index (CPI) rising 2.2% year-on-year in May, up from a 26-month low of 1.8% in April. Also, Japan’s retail sales (year-on-year) rose 2.4% in April, accelerating from a downwardly revised 1.1% increase in March and beating market forecasts of 1.9%. This marked the 26th consecutive month of growth, indicating continued healthy consumption in Japan.
The Bank of Japan (BoJ) has maintained an entrenched monetary policy stance. If inflation across Japan falls, this will prevent the central bank from raising interest rates. The wide interest rate differential between Japan and other countries continues to weigh on the yen, supporting the USD/JPY pair.
The dollar rebounded ahead of the release of the core personal consumption expenditures (PCE) price index, an inflation indicator favored by the Federal Reserve, on Friday. Falling US Treasury yields are likely to limit the dollar’s appreciation.
At press time, the US dollar index (DXY), which measures the value of the US dollar against six other major currencies, was trading around 104.80, with 2-year and 10-year US Treasury yields at 4.92% and 4.54%, respectively.
