Yen Mixed as Deflation Persists

The Japanese yen was mixed today, falling against some currencies and rising versus others (though still touching multi-month lows intraday). Fundamentals were not supportive for the currency as economic data showed that deflation persists despite efforts of policy makers.

Japan’s core Consumer Price Index fell 0.4% in October, matching forecasts but with a bit slower pace than in September (0.5%). The Tokyo core CPI also fell 0.4% in November, in line with expectations as well and with the same pace as in the previous month. The persisting deflation may spur the Bank of Japan to add even more monetary stimulus, though an argument can be made that excessive easing measures have diminishing return and Japan should seek other ways to reignite inflation.

USD/JPY dropped from 113.27 to 113.04 as of 11:12 GMT today, though the currency pair reached 113.89, the highest level since March 15. CHF/JPY ticked up from 111.37 to 111.56.

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