US Inflation Data Takes Centre Stage as Yen Shorts Rebound
The US Dollar (USD) against the Japanese Yen (JPY) is an interesting currency pair to watch this week, especially with the upcoming US inflation data. Speculative yen shorts have been reduced by around 40% following the intervention episode in late July, which has alleviated some positioning risks for USD/JPY.
However, the focus now shifts to Wednesday's US Consumer Price Index (CPI) release, which will help shape expectations for Federal Reserve rate hikes. The underlying consumer inflation has been running above the Fed's 2% target for around five years, while upstream producer price pressures have re-accelerated.
According to TradingView and FOREX.com, other Fed members have made it clear their focus remains on the inflation side of the dual mandate, putting emphasis on this week's inflation data. A hot print could revive rate hike expectations and support USD/JPY.