USD/JPY drops to 133.80 during early Friday morning in Asia as strong Japan inflation data renews hawkish bets on the Bank of Japan’s (BoJ) future moves ahead of today’s monetary policy meeting.

That said, Tokyo Consumer Price Index (CPI) came in 3.5% YoY for April versus 2.6% expected and 3.3% prior whereas Tokyo CPI ex Food, Energy, known as the Core CPI, also increased during the said month compared to 2.9% market forecasts and 3.4% previous readings.

With the upbeat inflation figures, the odds of witnessing a hawkish change in the Bank of Japan’s (BoJ) future communication become brighter, which in turn weigh on the USD/JPY of late, even if the BoJ is expected to keep the current monetary policy unchanged.

As a result, Friday’s BoJ becomes crucial for the USD/JPY pair traders as the aforementioned catalysts may allow the BoJ Governor Ueda to have an entertainment during the first day of the BoJ ruling. That said, Ueda’s speech and economic forecasts for the Asian major will be crucial to watch for clear directions.

Also read: Bank of Japan Preview: New governor but old policy

On the other hand, the first readings of the US Gross Domestic Product (GDP) for the first quarter (Q1) of 2023, also known as Advance readings, marked mixed outcomes. That said, the headline US GDP Annualized eased to 1.1% from 2.0% expected and 2.6% prior but the GDP Price Index inched higher to 4.0% on an annualized basis from 3.9% prior and 3.8% market consensus. Further, the Personal Consumption Expenditure (PCE) Prices for Q1 rallied to 4.2% from 3.7% in previous readouts whereas the Core PCE figures also crossed 4.8% market forecasts and 4.4% prior with 4.9% mark for the said period. It should be noted that a slump in the weekly Initial Jobless Claims also allowed the US Dollar to remain firmer.