Tokyo Core CPI eases to 2.5%, yen steady

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The Japanese yen is slightly weaker on Monday. In the North American session, USD/JPY is trading at 147.21, up 0.12% on the day. US markets are closed for Labor Day, which means that USD/JPY is unlikely to show stronger movement today.

Tokyo Core CPI eases to 2.5%

Tokyo Core CPI declined for a third consecutive month in August, with a gain of 2.5%, its lowest level since March. This was down sharply from 2.9% in July and matched the market estimate. Tokyo core CPI, which excludes fresh food, eased lower due to government utility subsidies.

The Bank of Japan appears on track to raise interest rates, but isn't providing any hints as to a date. The markets expect the BoJ to hold rates at the September 19 meeting, with a rate hike likely in October or December. The BoJ wants to see stronger wage growth before another hike and Governor Ueda said at the Jackson Hole conference that he expected the tight labor market would put upward pressure on wages.

Other data released on Friday pointed to weakness in Japan's economy. Retail sales slipped 1.6% m/m in July, down from a revised 0.9% in June and below the market estimate of -1.0%. Industrial production declined in July by 0.9% y/y, down sharply from a 4.4% gain in June and below the forecast of 2.8%.

The US tariffs have taken a bite out of production and exports and the US and Japan have reached a deal which leaves 15% tariffs on many Japanese products.

US PCE core inflation rises to 2.9%

The US core personal consumption expenditures price index (core PCE), the Federal Reserve's preferred inflation indicator, ticked higher to 2.9% in July, up from 2.8% in June. This was matched the market estimate and was a five-month high. Monthly, core PCE rose 0.3%, unchanged from June and in line with the market estimate.

The slight acceleratation has raised expectations of a rate cut at the Fed's September 17 meeting to 89%, up from 86% just before the core PCE release on Friday.

USD/JPY Technical

• USD/JPY tested resistance at 147.32 earlier. Above ,there is resistance at 147.43
• 147.13 and 147.02 are the next support levels

USDJPY 4-Hour Chart, September 1, 2025

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