Release Explanation: CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore give an overall read of inflationary pressures. It is the most widely used inflation indicator of central banks, institutions, and Governments. It is used to calculate cost of living numbers for Government programs. Each regional central bank will have their own CPI target rate, and each will differ in line with the way they individually want to control the aspects of their own economies. As the most important indicator of inflation, CPI figures are closely followed by the Bank of Japan. Rising Consumer Prices may prompt the BoJ to raise interest rates in order to manage inflation and slow economic growth.
Trade Desk Thoughts: Japans consumer prices have fallen to a flat 0.0 percent reading in January for the first time in over a year as a deepening recession has forced many households to curb spending. Record declines seen in the export market have prompted companies to lay off workers and cut wages, while slowing spending. Japans policy makers are also bracing for another bout of deflation which has plagued the country off and on for the past two decades.
Forex Technical Reaction: The yen has fallen approximately 50 pips from the high of the previous day and is currently finding support just above the neutral pivot point.