Authors: Karen Brettell and Harry Robertson
NEW YORK (Reuters) – The yen rose to a six-week high against the dollar on Friday after higher-than-expected inflation in Tokyo, supporting bets that the Bank of Japan will raise interest rates next month.
Tokyo’s core consumer price index, which excludes variable fresh food costs, rose 2.2% year-on-year in November from a year earlier, up from 1.8% last month and beating forecasts for a 2.2% enhance. .1%.
“The yen is becoming the latest trend… with little friction to prevent it from rising during the weak holiday trading period,” said Matt Simpson, senior market analyst at City Index.
Trading volumes fell on the Thursday before Thanksgiving in the US, and many investors were still out of the stock market on Friday.
The dollar was last down 1.27% at 149.62 yen, and had previously fallen to 149.47 yen, the lowest level since October 21. The weekly loss against the Japanese currency is forecast to be 3.38%, the steepest since July.
The stock fell 0.31% to 105.74, after previously hitting 105.61, its lowest level since November 12.
It is on track to gain 1.78% in November as investors adjust to the likelihood that the fresh U.S. administration under Donald Trump will loosen business regulations and introduce other growth-stimulating policies next year.
Analysts also say proposed fresh tariffs and promised curbs on illegal immigration could reignite inflation.
Better-than-expected macroeconomic data also reinforced assumptions that the Federal Reserve will snail-paced the pace of interest rate cuts as it approaches the neutral rate.
According to CME Group’s FedWatch Tool, investors are pricing in a 66% chance of a 25 basis point cut at the Fed meeting on December 17-18, but only a 17% chance of an additional cut in January.
The next crucial release of macroeconomic data in the US will be the employment report for November published next Friday.
The euro gained 0.24% to $1.0578. The common currency fell 2.8% in November as the dollar rose, marking its worst month since May 2023.
Friday’s data showed French consumer prices rose as expected in November. Thursday’s inflation report in Germany showed that price pressure remained stable in November despite expectations of a second consecutive enhance.
ECB policymaker Francois Villeroy de Galhau said on Thursday that the central bank should keep its options open for a larger interest rate cut next month, countering hawkish comments made the previous day by peer Isabel Schnabel.
rose 2.39% to $97,414, trying to return to the record high of $99,830 from a week ago.
The leading cryptocurrency will jump 39% this month – its best performance since February – on bets on a more favorable regulatory environment under Trump.
