USD/JPY declines to near 150.00 as US Dollar corrects ahead of US core PCE inflation

• USD/JPY drops to near 150.00 after a nominal correction in the US Dollar.
• The market sentiment improves as traders see interest rates by the Fed remaining unchanged in the range of 5.25-5.50%.
• Tokyo inflation rose in October amid ultra-loose monetary policy.

The USD/JPY pair fell sharply to near the psychological support of 150.00 in the European session. The asset faces a sell-off as the US Dollar Index (DXY) edged down after facing barricades near 106.90 and the Japanese Yen strengthened on higher Tokyo consumer inflation data.

S&P500 futures added significant gains in the London session, indicating an improvement in the risk appetite of the market participants. The market sentiment improves as traders see interest rates by the Federal Reserve (Fed) remaining unchanged in the range of 5.25-5.50% in the monetary policy decision on November 1.

The USD Index falls gradually to near 106.50 ahead of the core Personal Consumption Expenditure (PCE) price index data, which will be released at 12:30 GMT. According to the consensus, monthly core PCE inflation grew by 0.3% in September against 0.1% growth recorded in August. The annual economic data rose by 3.7% against a 3.9% reading in August a year ago.

A sticky core PCE inflation report may ramp up US Treasury yields further. The 10-year US bond yields skids from 5% but the near-term trend remains upbeat as the US economy is resilient amid a strong growth report. The US Gross Domestic Product (GDP) for the July-September quarter, released on Thursday, showed that the economy grew at a robust pace of 4.9% against expectations of 4.2% on an annualized basis.

On the Tokyo front, the headline Consumer Price Index (CPI) for October rose by 3.3% against 2.8% reading from September. The core inflation softens marginally to 3.8% against the former release of 3.9%. Investors hope that the Bank of Japan (BoJ) will increase inflation expectations in its quarterly projections report in the monetary policy meeting next week.