Yen slips to a three-week low on US CPI, then recovers it all

All of USD/JPY's jump on the hotter-than-forecast US inflation figures is gone, and the pair is just above 158.00, below where it was before the release. It went from near 158.50 to just under 159.00, its highest since September 24, and then fell back as US bond yields reversed.

The Dollar is up against eight other major currencies on Wednesday and down against the Yen. USD/JPY rose with the 10-year Treasury yield on the release, made its high just after the yield's peak, and fell with it as the yield gave back its jump.

Vice Finance Minister for International Affairs Mimura, Japan's top currency official, told markets on September 28 to take the warning on the Yen from Tokyo and Washington at face value. That was four days after USD/JPY made the high just under 159.00 that it nearly matched on Wednesday. The Bank of Japan (BoJ) rate of 1.25% against 3.75%-4.00% at the Fed is the gap any such warning has to work against.

On the calendar

Japan has nothing of note left to publish before the weekend, and the BoJ's next decision comes on October 30, two days after the Fed's. Until then Japan's rate is set, which leaves US figures and anything Tokyo says about the Yen as the pair's remaining inputs.

The Philadelphia Fed's October factory survey is forecast to fall to 28.4 from 37.8 on Thursday, and Cleveland Fed President Hammack speaks the same day. US industrial production for September follows on Friday, forecast up 0.4% after no change in August, and all of it reaches USD/JPY through the Treasury yields it tracked on Wednesday.

On the charts

Wednesday's high is a little more than half of the way back up the drop from the July 23 high just under 164.00 to the September 8 low just under 153.00. The day's low came at the 50-day Exponential Moving Average (EMA), which is just above 158.00, with the 200-day EMA a little over 157.50, and daily momentum has been cooling from overbought since early October.

USD/JPY daily chart