Ella 
On Friday, Japan’s June national consumer price index (CPI) remained stable at 2.8%, in line with the previous value and still at the highest level since February. The yen held steady after the data was released. At the same time, core inflation rose to 2.6%, slightly higher than the previous reading of 2.5%, but slightly lower than the consensus estimate of 2.7%.
Japan’s 10-year government bond yield was near 1.04%, rebounding from a three-week low. Japanese digital minister Kono Taro told Bloomberg that the Bank of Japan should raise interest rates again in July to support the yen, and yields rebounded after his speech. In addition, the Bank of Japan is expected to reveal its bond-buying reduction plan this month.
In July, USD/JPY fell 4% from a 38-year high of 161.95. Analysts attributed the decline to intervention by Japanese authorities. Traders remain wary of the possibility of further intervention.
Rising U.S. Treasury yields provided support to the dollar. However, as weak employment data raises expectations for a rate cut by the Federal Reserve in September, the dollar’s upside may be limited.
