BUZZ-COMMENT-Yen deflated by elevated inflation concern

The yen is likely to decline further as inflation concerns push global bond yields higher.

Yields have risen following an executive order from U.S. President Donald Trump imposing 25% tariffs on steel and aluminum. Base metal prices are struggling due to slow growth in China and a strong USD though broader inflation concerns are evident. G10 breakeven inflation rates have risen since the start of the year and gold is near a record.

Markets may see the risk that inflation fears intensify if reciprocal tariffs become commonplace or if central banks lower policy rates to ease growth pressures.

On Wednesday, Fed Chair Jerome Powell said inflation is somewhat elevated and that there is no hurry to adjust policy, echoing recent comments by other Fed officials.

Inflation reports this week from various nations, including the U.S. CPI on Wednesday, will reveal whether prices are rising too quickly.

Strong U.S. or European inflation numbers are likely to boost bond yields further, causing yen bulls to retreat. However, Bank of Japan efforts to curb domestic inflation and limit yen weakness will slow the currency's decline. For USD/JPY, a close above the 155.26 Jan. 30 high would be needed to suggest the tide is shifting in favor of bulls.

For more click on FXBUZ