Ella 
USD/JPY consolidated its recent losses during the Asian session on Tuesday. USD/JPY pared losses after plunging nearly 70 points late Monday on rumors that Japanese authorities may intervene in foreign exchange markets. USD/JPY is currently trading around 151.72, up 0.05% on the day.
On Tuesday, U.S. Treasury Secretary Yellen said she disagreed with Moody’s decision to change the U.S. rating outlook to “negative” while adding that she was confident in the U.S. economy and Treasury bonds as safe-haven assets.
As Fed officials have said, further tightening will depend on economic data. Investors will take cues from U.S. inflation data on Tuesday. The overall U.S. consumer price index (CPI) is expected to increase by 0.1% on a monthly basis in October, with the core inflation indicator at a monthly and annual rate of 0.3% and 4.1% respectively. Additionally, the New York Fed Consumer Expectations Survey showed one-year and five-year inflation expectations falling to 3.57% and 2.72% respectively.
Stronger inflation data could persuade the Fed to raise interest rates at its December or January meeting to bring inflation back to target. This could therefore boost the US dollar and act as a tailwind for the USD/JPY pair.
Regarding the yen, Japanese Finance Minister Shunichi Suzuki made a verbal intervention on Monday, saying that it is very important for the currency to fluctuate in a stable trend that reflects fundamentals, and that it will continue to take all possible measures to control foreign exchange trends. However, both Japanese Finance Minister Suzuki and Bank of Japan (BOJ) Deputy Governor Shinichi Uchida declined to comment on foreign exchange rate levels.
In addition, Masaki Kazuhiro, Director General of the Bank of Japan’s Monetary Affairs Department, said that even if long-term interest rates face upward pressure, the Bank of Japan does not believe that the 10-year bond yield will significantly exceed 1%.
Market participants will focus on the U.S. Consumer Price Index due later on Tuesday. The market’s focus will turn to Japan’s preliminary third-quarter gross domestic product (GDP) released on Wednesday. These events may provide direction for USD/JPY.
