USD/JPY drops under 154.00

The slightly better than expected US April CPI report weighed on US yield and, in turn, USD/JPY.

• Forexlive Americas FX news wrap 15 May: Green grass ahead as CPI/spending is tame

This’ll be a relief for Japanese authorities. Or is it just a reprieve? While the yield gap between the US and Japan has narrowed its still a nice carry. But, markets discount the future so the narrowing has brought on some offloading of USD/JPY. I suspect we’ll go from a fierce uptrend to something with more sideways action for a few weeks at least.

Just don’t ask me to get bearish on it yet, thats a bridge too far 😉

The poor Japanese GDP data will complicate the BOJ’s job at raising rates:

• Japan’s annualised Q1 GDP -2.0% q/q (vs -1.5% expected)

This article was written by Eamonn Sheridan at www.forexlive.com.