USDJPY Eyes 160.00 Again Amid Rising Tokyo Inflation

The Japanese yen has gained strength due to higher Tokyo inflation and falling unemployment, but it's losing ground against all G10 currencies. The USDJPY exchange rate is nearing its post-intervention peak of 160.00, with a small gain of +0.12% today, reaching 159.500.

The Bank of Japan (BOJ) has been watching inflation closely, and the latest core CPI data shows it accelerated to 1.8% YoY in August from 1.7% in July, beating expectations. Core-core CPI rose to 2.0% YoY compared to 1.8% in July.

This increase in inflation is due to steady growth in food costs and the pass-through of higher energy and commodity prices from businesses to consumers. However, markets are pricing in an ~84% probability of a hawkish move by the BOJ in September, with many expecting Japanese rate hikes.