The Japanese government released data on Friday showing that the core consumer price index (CPI) rose by 2.4% year-on-year in September, marking the first slowdown in five months. This result was mainly influenced by the government's implementation of energy price subsidy policies, aiming to alleviate the pressure of energy costs on overall prices. Nonetheless, this rate of increase was slightly above the market expectation of 2.3% but lower than the previous month's 2.8%. In the same period, Japan's national CPI rose by 2.5% year-on-year, also lower than the previous value of 3%.
After the data release, the yen briefly strengthened, reflecting a positive market reaction to the easing inflation. However, the U.S. dollar's strength in the global foreign exchange markets remains evident, with the dollar-yen exchange rate previously breaking through the 150 mark. This is the first time since August this year that the dollar-yen rate has reached this level.
The dollar's strength is partly supported by U.S. retail sales data exceeding market expectations, indicating a continuously robust American economy. Additionally, the European Central Bank's rate cut decision further boosted the dollar's performance, strengthening the dollar in global currency markets.
As Japan's economic performance within the global economic environment, particularly the evolution of inflation trends, the volatility of the foreign exchange market may further intensify. The Japanese government's monetary policy direction, the duration of energy subsidy measures, and macroeconomic data from major global economies will become crucial factors affecting the foreign exchange market. The yen's performance will continue to attract investor attention, especially in the context of the dollar's sustained strength, posing a key challenge in maintaining the yen's stability.
