Higher Japan’s CPI Strengthens Japanese Yen | IFCM
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Higher Japan’s CPI Strengthens Japanese Yen - 29.11.2013

Last night the Japanese Yen was under heavy selling pressure with the USDJPY advancing to new 6-month high at 102.59 on market participants expectations that Bank of Japan would get more aggressive.


However, sentiment was reversed after the release of increasing Japan’s CPI data easing BOJ stimulus speculation. The Nationwide CPI remained unchanged at 1.1% increase in October while the Nationwide Core CPI increased by 0.9% in October, up from 0.7% in September. Additionally the Tokyo area CPI jumped by 0.9% in November up from 0.6% the previous month.


Japan CPI vs Core CPI


The Japanese Yen strengthened on rising CPI figures due to fading speculation that BOJ would add stimulus to ensure 2% inflation target. Thus the USDJPY retreated as low as 102.10 from peak at 102.59, in addition the EURJPY corrected lower, from more than a 5-year peak at 139.67 to 138.94. The British pound against the Japanese was also down from 5-year top at 167.84 to 166.84. Going into next week, risks for Yen start early with CNY Manufacturing data on Sunday and early on Monday Japanese Business Capital expenditure data, we would expect the Japanese Yen to remain weak against its major counterparties but this would depend fundamental developments as well.


Elsewhere, the Spain’s debt outlook was raised to stable from negative by Standard & Poor’s, which cite recent return to economic growth for Spain, the rating agency has also decided lower Netherlands debt outlook to AA- from AAA+ and raise Cyprus to B- from CCC+. The Euro against the greenback jumped to 1.3620 but quickly eased back to 1.3605 early on Friday ahead of CPI Flash estimate for November and Unemployment data. Lastly, the British pound against the US dollar softened from more than 2-year high at 1.6357 after the release of weaker than estimated consumer confidence data.
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