Anna 
The Japanese Yen (JPY) experienced continued depreciation on Friday following the release of softer National Consumer Price Index (CPI) data by the Statistics Bureau of Japan. The annual inflation rate dipped to 2.5% in April from 2.7% in the previous month, marking the second consecutive month of moderation. Despite this, inflation remains above the Bank of Japan’s (BoJ) 2% target, maintaining pressure on the central bank to consider further policy tightening.
The Bank of Japan has underscored the importance of achieving a sustained, stable 2% price target alongside robust wage growth for policy normalization. However, with inflation moderating, investors anticipate the possibility of the BOJ advancing its next interest rate hike to address the impact on the cost of living, as reported by Reuters.
In contrast, the US Dollar (USD) advanced amidst hawkish sentiment surrounding the Federal Reserve (Fed), which signals the maintenance of higher policy rates for an extended period. This sentiment was bolstered by higher-than-expected Purchasing Managers Index (PMI) data from the United States (US), released on Thursday.
Investor attention is now directed towards the Michigan Consumer Sentiment Index, scheduled for release on Friday. This index is expected to provide insights into consumer attitudes regarding financial and income situations in the United States, offering further clarity on the economic outlook.
As market participants digest economic data and central bank signals, the trajectory of the Japanese Yen and the US Dollar will likely be influenced by ongoing developments in inflation, monetary policy, and consumer sentiment.
