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USD/JPY poised to move rapidly if US CPI surprises

An update here yesterday noted that the recent prices paid element of the ISM data pointed to a higher level of US inflation in January, but at the same time the markets do not expect the CPI data to evidence that. The general consensus is for the annualised rate to have fallen back last month. The headline rate is expected to be running at 2.9%, from 3.4% and the core rate is expected to have risen by 3.7% from 3.9%. The monthly rate in December has already been revised lower, to +0.2% and is expected to be unchanged last month. Now, I do not have a crystal ball, so I cannot say for sure if prices are running hotter than forecast, but it would not surprise me if they were. What we should hope for most of all is a surprise, no matter which way that is, because it will lead to volatility and volatility breeds opportunity for you. So, just ahead of this release the dollar has been edging a bit lower and the lead gainer as far as this morning is concerned has been the Pound. However, and with all things that can shift US yields dynamically, the USD/JPY is very much front and centre of any reaction this afternoon. Immediate levels that come into view are 148.93 and 150.00. The USD/JPY is just now pretty much in the middle of those two, as it waits to see what this CPI report has in store at 1.30PM GMT. The USD/JPY is currently trading at 149.37

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