Euro Slips as Japan Shifts Toward Domestic Investment

The Euro has slipped against the Japanese Yen as soft inflation data from the Eurozone and Japan's Finance Minister announcement of a potential shift toward greater domestic investment boosted the JPY.

The EUR/JPY trades around 184.95, down 0.35% on the day, with the Japanese government aiming to encourage households and the Government Pension Investment Fund (GPIF) to increase their investments in Japanese financial assets.

Inflationary pressures continue to moderate across the Eurozone, with confirmed data showing that Germany's Harmonized Index of Consumer Prices rose 2.4% YoY in June, down from 2.7% in May, while monthly prices declined by 0.2%. France's Consumer Price Index also slowed to 2% YoY from 2.8% in May.

MUFG analyst Derek Halpenny believes these policy changes will take time to produce meaningful effects and that confidence in the Bank of Japan remains essential before institutional investors significantly reduce overseas investments in favor of Japanese government bonds.