Japanese Yen comes under pressure following Tokyo CPI

• The Japanese Yen struggles after the release of the Tokyo CPI data on Friday.
• The JPY’s downside may be limited as traders may continue unwinding their carry trades ahead of the BoJ meeting.
• The US Dollar appreciates as recent US economic data have reduced rate cut expectations for September.

The Japanese Yen (JPY) extends its losses against the US Dollar (USD) on Friday after the Statistics Bureau of Japan released the Tokyo Consumer Price Index (CPI) data. However, the Yen’s decline might be restrained as traders potentially unwind their carry trades ahead of the Bank of Japan’s two-day policy meeting, concluding on Wednesday. During the meeting, the board will discuss the possibility of raising interest rates and outline details on tapering its extensive bond purchases.

Japan’s top currency diplomat, Masato Kanda, informed the G20 on Friday that foreign exchange (FX) volatility negatively impacts the Japanese economy. He noted an increasing likelihood of a soft landing and emphasized the need to closely monitor the economy and implement necessary measures, according to Reuters.