Euro Rises Against Yen as ECB Hike Expectations Clash with BoJ Tightening
The Euro gained against the Japanese Yen on Friday, rising 0.15% to trade around 184.15 at the time of writing. The pair remains supported by expectations that Japan's Bank of Japan (BoJ) could raise interest rates as soon as September, and investors anticipating further monetary tightening in the Eurozone.
The European Central Bank (ECB) is widely expected to raise interest rates at its September meeting, marking its second hike this year. This would be driven by risks surrounding Eurozone inflation, which remain tilted to the upside, keeping the prospect of further monetary tightening alive and providing support to the Euro.
Latest growth figures also provide a relatively supportive backdrop for the single currency. Eurostat's second estimate confirms that Eurozone Gross Domestic Product (GDP) expanded by 0.4% QoQ in the second quarter, in line with the preliminary estimate released in July and following no growth in the previous quarter.
However, expectations of a BoJ rate hike limit EUR/JPY's upside potential. The possibility of further intervention in the foreign exchange market also remains under scrutiny, as Japan's Ministry of Finance reported joint US-Japan intervention in late July to counter “excessive volatility and disorderly movements” in the Japanese Yen.