Forex News: Yen Falls As Tokyo CPI Inflation Slows

Yen Falls As Tokyo CPI Inflation Slows

(RTTNews) - The safe-haven Japanese yen weakened against other major currencies in the Asian session on Friday, as data showed Tokyo CPI inflation eased more than expected in July, complicating the Bank of Japan's interest-rate hike prospects.

Data from the Ministry of Internal Affairs and Communications showed that overall consumer prices in the Tokyo region of Japan were up 2.9 percent on year in July. That was shy of expectations for an increase of 3.0 percent on year and down from 3.1 percent in June. Core CPI, which excludes the volatile costs of food, also was up an annual 2.9 percent. That, too, was beneath expectations for 3.0 percent and down from 3.1 percent in the previous month.

Political uncertainty in Japan also weighed on the currency. Further monetary policy decisions are put on hold by Prime Minister Ishiba's weakness following last weekend's election defeat.

Traders focus to the Fed and BoJ meetings due next week, with both expected to hold rates steady.

U.S. President Donald Trump downplayed his clash with Federal Reserve Chairman Jerome Powell over cost overruns, making it clear that he saw the issue of lower interest rates as a more pressing concern.

Investors remained cautious as well as optimistic that the U.S. will sign up more deals with its remaining trading partners before President Donald Trump's Aug. 1 deadline. The UK, China, Vietnam, and Indonesia have already struck deals, while Canada, India, South Korea, and the EU are ramping up their efforts.

U.S. Secretary of the Treasury Scott Bessent reportedly said that the talks were "going better than they had been," and that progress was being made.

U.S. President Donald Trump has now reworded his threat stating that imports into the U.S. could face tariffs ranging from 15 to 50 per cent for countries that fail to sign a suitable deal past the August 1 deadline.

In other economic news, the Bank of Japan said that producer prices in Japan were up 3.2 percent on year in June. That was in line with expectations and down from the upwardly revised 34 percent in May (originally 3.3 percent). On a monthly basis, producer prices slipped 0.1 percent for the second straight month. Excluding international transportation, producer prices were up 3.3 percent on year and down 0.2 percent on month. That follows the 3.6 percent yearly gain and the flat monthly reading in May. In the Asian trading today, the yen fell to a 9-day low of 173.18 against the euro and a 3-day low of 147.50 against the U.S. dollar, from yesterday's closing quotes of 172.49 and 147.01, respectively. If the yen extends its downtrend, it is likely to find support around 174.00 against the euro and 148.00 against the greenback.

Against the pound and the Swiss franc, the yen dropped to 2-day lows of 199.06 and 185.20 from Thursday's closing quotes of 198.59 and 184.94, respectively. The yen may test support near 200.00 against the pound and 186.00 against the franc.

Looking ahead, U.S. durable goods orders for June, Canada budget balance for May and U.S. Baker Hughes oil rig count data are slated for release in the New York session.

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