Ella 
In early Asian trading on Thursday, USD/JPY lost momentum and fell below the 147.00 level. A weaker U.S. dollar pushed USD/JPY lower, with USD/JPY currently trading around 147.12, down 0.23% on the day.
The U.S. Bureau of Labor Statistics (Bureau of Labor Statistics) announced on Wednesday that the overall monthly inflation rate in August hit the largest increase in 14 months, with the U.S. Consumer Price Index (CPI) rising by 0.6% from the previous value of 0.2%. Meanwhile, the annual rate rose to 3.7% from 3.2%, beating market expectations. Core inflation, which excludes volatile food and energy prices, rose 0.3% monthly from 0.2% in July. For the full year, core inflation was at an annualized rate of 4.3%, compared with 4.7% in the previous month.
The dollar briefly surged after the data was released, but then lost momentum as markets expected next week’s Federal Reserve meeting to be on hold. However, these data mean that the Fed should be wary of another acceleration in inflation in the coming months and raising interest rates. Investors have put a 97% chance of rates remaining unchanged at 5.25%-5.50% in September. However, the CME FedWatch Tool shows that the probability of a rate hike at the November meeting has risen to 49.2%.
In the yen, market participants expected a major shift in the outlook for the Bank of Japan’s monetary policy after Bank of Japan Governor Kazuo Ueda made hawkish remarks last weekend. Bank of Japan Governor Kazuo Ueda said in an interview on Monday that the central bank may exit its negative interest rate policy when it gets closer to its 2% inflation target and that the Bank of Japan will have enough evidence by the end of the year to evaluate whether negative interest rates should continue to be maintained. In addition, Japan’s Finance Minister Shuni Suzuki said on Wednesday that it will strive for appropriate debt management.
In terms of data, data released by the Japanese Cabinet Office on Thursday showed that the annual rate of Japanese machinery orders in July was -13%, compared with the previous value of -5.8%. On a monthly basis, the annual rate of Japanese machinery orders in July recorded -1.1% from an increase of 2.7% in June. Both data were lower than market expectations.
Next, traders will keep a close eye on Thursday’s U.S. jobless claims data, producer price index (PPI) and retail sales. Traders will take cues from this data and look for USD/JPY trading opportunities from it.
