US CPI drives the yen higher

On Thursday, data showed that US inflation cooled more than expected, leading to a sharp rise in the USD/JPY exchange rate. Market sources indicated that the selling of the US dollar was likely a result of profit-taking after weak US data, but traders remain highly vigilant for signs of new intervention measures by the Japanese authorities to boost the currency hovering near a 38-year low. The USD/JPY fell by as much as 2.5% to below 158. Kenneth Broux, Director of FX and Rates Corporate Research at Natixis, stated that this is undoubtedly a major market move, but it cannot be attributed to intervention. CPI is the triggering factor, and the sharp drop in USD/JPY is more about triggering stop-loss orders rather than intervention