Yen slides as BOJ core inflation higher than expected, US durable goods expected to plunge

The Japanese yen is down for a second straight day. In the European session, USD/JPY is trading at 144.14, up 0.91% on the day.

BoJ core CPI rose to 2.4% in April, after three straight readings of 2.2% and above the market estimate of 2.3%. This was the highest level since Jan. 2024. Japan's Services PPI also rose to 3.1% in April, lower than the upwardly revised 3.3% gain but above the market estimate of 3.0%.

This release comes on the heels of Japan's core CPI, which jumped in April to 3.5% from 2.4%, the highest level in two years. Core inflation has held above the Bank of Japan's 2% target for over three years but the central bank has been very slow to raise interest rates.

Governor Ueda said on Tuesday that the BoJ would adjust its rate policy "as needed" if economic expectations are met, a vague reference but still an acknowledgement that the next move will be a rate hike. The markets expect the BoJ to maintain its wait-and-see mode for some time, with a rate hike unlikely before September at the earliest.

The BoJ has revised lower its growth and inflation projections to the current economic uncertainties, particularly those related to US trade policy. The central bank meets next on June 17 and is widely expected to hold its policy settings steady.

US core durable goods expected to plunge

US markets are back in action after the Memorial Day holiday on Monday. US Durable Goods Orders are expected to slide by 7.8% in April, after a 7.5% gain in March, which was the fastest pace of growth since July 2020. As well, The Conference Board Consumer Confidence index, which has fallen steadily this year, is expected to improve to 87.0 from 86.0.

• USD/JPY faces resistance at 144.58 and 146.58
• 143.50 and 141.50 are the next support levels