JPY: Data and safe-haven backdrop – Danske Bank

Danske Research Team underlines that Japan’s March national Consumer Price Index (CPI) is unlikely to show a surge, contrasting with global inflation trends, with consensus at 1.8% for CPI excluding fresh food. The team also notes a strong rise in Japan’s Manufacturing PMI and firmer factory output, while US Treasuries gain as risk sentiment softens on Middle East tensions.

Muted inflation and stronger manufacturing

"In Japan, the April Composite PMI declined slightly to 52.4 from 53.0, as a strong rise in Manufacturing PMI to 54.9 (prior: 51.6) was offset by a slowdown in Services PMI to 51.2 (prior: 53.4)."

"Notably, factory output recorded its strongest increase since February 2014, driven by manufacturers ramping up production amid concerns over potential future supply shortages linked to the war in the Middle East."

"Overnight in Japan, the national March CPI is released. We are not likely to see a Japanese inflation surge, as opposed to the global trend."

"Tokyo headline inflation even suggests a modest decline, as government subsidies are keeping gasoline prices close to a price of USD1/litre."

"Consensus is pointing to a modest increase, though, to 1.8% for CPI inflation excluding fresh food."