Yen Eases Off, Focus Shifts to Dollar Market as US Consumer Price Index Released Today

In the Tokyo market, the yen's strength has eased off. While market speculation regarding the Bank of Japan's March negative interest rate removal has increased, there have been no direct references from BOJ Governor Ueda today. Rather, remarks expressing concerns about weak consumption have led to movements in favor of yen depreciation.

Attention in the upcoming overseas markets will be on the February US Consumer Price Index (CPI). Market consensus expects a year-on-year increase of +3.1%, matching the previous level. The core year-on-year is anticipated to slow down from the previous +3.9% to +3.7%. Additionally, the month-on-month is expected to accelerate from +0.3% to +0.4%, while the core month-on-month is predicted to decelerate from +0.4% to +0.3%. Overall, while not overturning the trend of declining inflation, the forecasts suggest a challenging scenario. Market anticipation revolves around the deviation between the expected and actual year-on-year figures, expecting a sharp reaction in the dollar market.

Furthermore, preceding this, a series of employment-related indicators will be released in the UK. Yesterday's REC/KPMG employment survey in the UK showed a three-year low in the February regular employee pay index. Today's official wage data from the ONS in the UK is likely to be closely monitored.

Currently, speculation about a June rate cut based on a series of ECB officials' remarks is increasing. Depending on today's US and UK indicators, there could be significant fluctuations in market expectations regarding whether an early rate cut will begin or if there will be any attempts to initiate a rate cut by the end of the year. One should be cautious as pound-dollar and euro-dollar movements alongside dollar-yen could become volatile.

Today, significant attention is placed on the movement of the USD following the release of the February Consumer Price Index (CPI). If there's a trend of selling the US dollar, we'll consider following suit. Note that daylight saving time is currently in effect, so be mindful of time differences.