Yen Surges on Japan's Hotter Inflation Data

The Japanese yen experienced a rebound against major and minor currencies in European trading on Friday. This move came as the US dollar weakened following comments from US Treasury Secretary Scott Bessent that hinted at further intervention in the US bond market.

Data released in Tokyo showed Japan's core inflation accelerated to 1.8% year-on-year in July, matching market expectations and surpassing June's 1.6%. This marked a sixth consecutive month where core inflation remained below the Bank of Japan's 2% target.

As a result of this data, market pricing for a 25-basis-point interest rate hike by the Bank of Japan at its September meeting rose from 77% to 82%. However, investors are awaiting further data on inflation, unemployment, and wages in Japan before reassessing these expectations.