The Japanese yen weakened to the mid-137s per USD. The US Consimer Price Index (CPI) report will be the main highlight tomorrow. Strong figures could propel the USD/JPY pair towards 140, economists at Scotiabank report.

Bank of Japan not expected to act on rates or its yield curve target soon

“With the BoJ not expected to act on rates or its yield curve target soon, the JPY’s performance will depend on moves in US yields and this week’s inflation data will be a key determinant of these ahead of the Fed’s decision in late-Jul. Strong data could motivate the cross toward the next key figure, 140.” 

“On the flip side, a print that supports the idea of peak US inflation and vindicates the recent paring of Fed hike expectations would help the JPY strengthen through 135.”