The really important US data release that could deliver more USD/JPY volatility today

Recently, the focus for the USD/JPY has been all about the outlook for Japanese monetary policy and the prospect of the BOJ abandoning its yield curve control (YCC) as early as next week. That could even mean a rate rise from the BOJ on December 19. However, all that was walked back on by reports circulating around the markets yesterday. This is what caused the USD/JPY to rise above 146.50 at one point. At the same time, very few analysts expect any change from the Fed tomorrow evening. However, there is one extremely important data release due out later today, which could question that outlook. That is latest US monthly CPI report, at 1.30pm GMT. Much will depend on whether this data is markedly higher than currently envisaged. The markets are anticipating a benign CPI report. We know the Fed is now data dependent and this report could deliver a more hawkish outlook (or the opposite) tomorrow, even if the FOMC does not immediately move on rates, There will be more to add on this later this morning, but this data is for sure the main game in town today. For that reason the USD/JPY will be reactive to it. The USD/JPY is currently trading at 145.45