Japanese yen rebounds after corporate service inflation beats estimate

The yen has bounced back on Thursday after a massive slide a day earlier. USD/JPY is trading at 142.44 in the European session, down 0.67% on the day.

Japan's corporate service inflation eased to 3.1% in March from the revised 3.2% gain in February. This was higher than the market estimate of 3.0%.

Tokyo Core CPI expected to jump

On Friday, Tokyo Core CPI is expected to jump to 3.2% in April, following a 2.4% gain a month earlier. A sharp acceleration in Tokyo Core CPI would support the case for the Bank of Japan to continue raising interest rates. Last week, National Core CPI for March accelerated to 3.2% from 3.0%, primarily due to rising food costs.

Wages and inflation are on the rise but the uncertainty over US tariffs has complicated matters for the central bank, which be looking for more clarity about the tariffs before raising rates. The BoJ kept rates unchanged last month and is expected to stay on the sidelines again at the meeting on May 1.

Yen slides after Trump says he'll reduce China tariffs

The US dollar pummelled the yen on Wednesday, surging 1.3%. The dollar was powered by President Trump announcing that he planned to "substantially" lower tariffs on China. The financial markets viewed the statement as a signal that the US was de-escalating the trade war with China, although talks have not yen started between the two sides.

The market also reacted positively as Trump said he had no intention of dismissing Fed Chair Jerome Powell. Trump had launched a blistering attack on Powell in recent days and the US dollar and US equity markets retreated as Trump's threats on Powell eroded confidence in the US financial system.

• USD/JPY has pushed below support below 142.82. Below, there is support at 142.07
• There is resistance at 144.19 and 144.94