JPY Gains Momentum as Tokyo CPI Exceeds Expectations
The Japanese Yen (JPY) strengthened against major currencies on Friday, including the Euro (EUR), as Tokyo Consumer Price Index (CPI) data for September exceeded expectations. The CPI ex fresh food arrived at a year-on-year rate of 2.7%, higher than estimates of 2.4% and the previous reading of 1.8%. This reinforced expectations of further interest rate hikes by the Bank of Japan (BoJ), which has been a major driver for the JPY's recent gains.
The Euro, on the other hand, is expected to trade cautiously ahead of the release of Eurozone preliminary Harmonized Index of Consumer Prices (HICP) data for September. The HICP data will be closely watched as it could impact the European Central Bank's monetary policy decisions. Meanwhile, France's public debt has reached 119% of its Gross Domestic Product (GDP), pushing 10-year bond yields to a high not seen since August 2002.
France's Finance Minister Roland Lescure has vowed to put public finances back on track for budget consolidation, aiming to reduce the budget deficit from 5% of economic output next year to the European Union limit of 3% by 2029. The BoJ Summary of Opinions of the September policy meeting also showed that several policymakers argued in favor of tightening monetary conditions further, adding that 'focus must be on anchoring underlying inflation near 2%.'