USD/JPY picks bids around 142.50, US Inflation in focus

• USD/JPY has picked significant bids around 142.50 despite lower consensus for the US inflation.
• A back-to-back decline in US CPI will force the Fed to scale down its hawkish tone.
• The depreciating yen is impacting the corporate margins to a great extent.

The USD/JPY pair has sensed a decent buying interest around the immediate support of 142.50 in THE Asian session. The asset is aiming for a rebound as investors have focused their shift on the US Consumer Price Index (CPI) data, which will release on Tuesday. Broadly, the asset has remained in the grip of bears for the past week after failing to cross the critical hurdle of 145.00. The major has slipped to near 142.00 and is expected to display volatile moves ahead of US inflation data.

A decline in forecasts for the US inflation data has trimmed the bullish bets toward the US dollar index (DXY). The inflation rate is expected to trim down to 8.1% against the prior release of 8.5%. In case of its occurrence, the Federal Reserve (Fed) will scale down its hawkish tone for interest rate guidance. A back-to-back decline in the headline inflation rate will bolster the fact that an intermittent top for price pressures have created and exhaustion signals are dragging it lower.

On the Tokyo front, the depreciating yen is impacting the Japanese economy. A weaker yen is resulting in costly imports in the Japanese economy. This is impacting the margins of the corporate sector to a great extent as input prices have soared dramatically and the companies have failed in passing on the impact of higher input prices to the end consumers.

Meanwhile, Goldman Sachs has argued that intervention in Fx moves from Japan’s officials doesn’t seem to be a part of ongoing planning. As the Bank of Japan (BOJ) is still sticking to its ultra-loose monetary policy and the intervention is followed by a stance change in monetary policy.