The Japanese yen traded broadly lower on Friday due to unimpressive inflation data released from Japan during the trading session and the outlook for monetary policy of the Bank of Japan.
The BoJ increased its JGB purchases, and analysts interpreted that as a sign that the central bank does not intend to taper its asset-purchase program. Meanwhile, Japan’s core Consumer Price Index fell 0.2% in December from a year ago, and Tokyo core CPI was down 0.3% in January 2017 from January 2016. And while the data beat expectations and was an improvement compared to the indicators from the previous reporting period, it was a disappointing result after several years of extreme stimulus from the BoJ and nowhere near the central bank’s 2% target.
Adding to the woes of the yen was Friday’s macroeconomic data from the United States, the GDP report in particular. It showed slowing growth of the US economy, leading to speculations among market participants that the Federal Reserve will not be raising interest rates fast. That encouraged investors to buy assets associated with higher risk but also with higher yield, while safety provide by the yen had little demand.
USD/JPY opened at 114.52 and rose to close at 115.03. EUR/JPY gained from 122.33 to 123.07. CHF/JPY was up from 114.55 to settle at 114.99.
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