After the release of a weaker-than-expected US CPI inflation report on Wednesday, the US Dollar (USD) experienced a slight drop. This led to a temporary strengthening of the Japanese Yen (JPY) against the USD, according to analysts at Rabobank.
The market does not anticipate any surprises from the Bank of Japan (BoJ) in terms of a hawkish stance. The recent performance of the JPY indicates a lack of optimism for a more aggressive approach from the BoJ at their upcoming policy meeting. This pessimistic outlook on the JPY has been a concern for Japanese policymakers, but it may present an opportunity for Governor Ueda to take a different approach and challenge the consensus. Despite some fluctuations, the USD/JPY pair eventually returned to levels seen before the release of the US data, with the JPY being the weakest performer among G10 currencies on a one-day basis.