Euro Falls Against Yen on Strong Tokyo CPI Data

The Euro (EUR) has been trading flat against the Japanese Yen (JPY) at around 177.60 during the Asian trading session on Friday, but is close to its fresh over 10-month low of 176.66 posted the previous day.

The Japanese currency broadly outperformed on Friday as Tokyo Consumer Price Index (CPI) data for September remained stronger-than-expected, reinforcing expectations of more interest rate hikes by the Bank of Japan (BoJ) in the near term.

Tokyo CPI ex. Fresh Food arrived at 2.7% Year-on-Year (YoY), higher than 2.4% estimates and the previous reading of 1.8%. The headline inflation accelerated to 2.7% from 1.9% in August.

The BoJ Summary of Opinions of the September policy meeting on Thursday showed that several policymakers argued in favor of tightening monetary conditions further, adding that "focus must be on anchoring underlying inflation near 2%".

Meanwhile, the Euro is expected to trade cautiously as surging government bond yields in France due to accelerating public debt could prompt fiscal concerns. The public debt in France now stands at 119% of Gross Domestic Product (GDP), which has pushed 10-year France bond yields to 4.96%, the highest level seen since August 2002.