JPY Strengthens as Japanese Inflation Hits Fastest Pace Since January

The Japanese Yen (JPY) has strengthened against the US Dollar (USD), driven by accelerating underlying inflation in Japan that reinforces expectations of higher Japanese interest rates.

According to data released on Friday, the core Consumer Price Index (CPI), which excludes fresh food, rose 1.8% YoY in July, marking its fastest pace since January.

This development has provided support for the JPY, with strategists at Scotiabank highlighting that Japan's latest data run is reinforcing expectations for Bank of Japan tightening.

The US Dollar Index (DXY), which measures the Greenback's performance against a basket of six major currencies, remains close to its lowest level since May 14.