USD/JPY trades lower as Trump’s strong Dollar claim fades

• US Dollar is losing traction received from Trump’s strong Dollar comments
• Japan’s inflation disappoints but spurs little FX market reaction  

The USD/JPY trading calmly lower at around ¥109.00 against the US Dollar after the greenback boosting effect of Trump’s comment is fading away and Japan’s inflation data came out below expectations.

The USD/JPY trading lower is in line with general trend of the US Dollar losing after short-term boost overnight from the US President Donald Trump saying that the US actually favours a strong dollar, stating that the US Dollar will go “up and up”, and that statements made by Secretary of the Treasury Steven Mnuchin were ‘misinterpreted’ by markets. 

The Japanese inflation figures came out slightly below market expectations with the Tokyo area CPI excluding fresh food decelerating to 0.7% y/y in January while the nationwide CPI excluding fresh food rose 0.9% year-on-year, in line with expectations.

While the Bank of Japan (BoJ) noted in their meeting minutes that growth has been weak, with some downside risks, inflation is still outside of their target band of 1-3%. The BoJ also anticipates a slowdown for the first half of 2018, putting a damper on market hopes that a tapering of the BoJ’s stimulus program could come earlier than expected.