Yen Firms on Strong Tokyo Inflation Data

The Japanese yen strengthened on Friday after Tokyo's consumer price index (CPI) inflation numbers came in higher than expected. The CPI jumped to its highest levels since November 2025, with underlying inflation remaining above the Bank of Japan's 2% annual target.

This has boosted bets that the BOJ will raise interest rates further in the coming months. Japanese bond prices fell as a result, with the benchmark 10-year yield sliding 1.25% after hitting a 30-year high earlier this week.

The dollar was relatively steady ahead of key U.S. labor data releases. The greenback had been supported by signs of continued resilience in the U.S. economy, giving the Federal Reserve more room to raise interest rates. Fed officials including Neel Kashkari and Lorie Logan have warned that rates will need to rise further to combat sticky inflation.

Rising Treasury yields and oil prices weighed on broader currency markets. The South Korean won was flat after mildly softer-than-expected consumer inflation, while the Indian rupee fell towards record lows due to high oil import reliance.