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In early Asian trading on Monday, USD/JPY strengthened to around 155.80 for the third consecutive trading day. Japan’s first quarter (Q1) gross domestic product (GDP) data was weak, supporting USD/JPY’s retreat. Fed officials Bostic, Barr, Waller, Jefferson and Mester will speak later in the day. Minutes of the Fed meeting will be released on Wednesday. Japan’s national consumer price index (CPI) will be in focus on Friday.
Atlanta Fed President Raphael Bostic said on Friday that he saw signs of cooling in recent inflation data, but he would prefer to watch data from May and June to ensure that inflation Will not reverse. Meanwhile, Richmond Fed President Tom Barkin noted that the central bank needs to keep borrowing costs high for longer to ensure inflation remains consistent with its target.
Cleveland Fed President Loretta Mester said policy is well positioned and it is too early to say progress in combating inflation has stalled. Richmond Fed President Tom Barkin said the Fed needs to keep borrowing costs high for longer to ensure inflation reaches its target.
The wide interest rate differential between the US and Japan has put some selling pressure on the Japanese yen (JPY) and lifted USD/JPY. The Bank of Japan abandoned the world’s only negative interest rate policy in March. The Bank of Japan emphasized that financial conditions will remain loose and interest rates will be raised slowly.
