The USD/JPY pair lost traction around 150.95 during the early Asian session on Friday (11/29). The Japanese yen (JPY) moved higher after Japan's Tokyo Consumer Price Index (CPI) inflation report came in higher than expected for November.
Data released by the Statistics Bureau of Japan on Friday showed that the Tokyo Consumer Price Index (CPI) rose by 2.6% YoY in November, compared to 1.8% in the previous month. Meanwhile, the Tokyo CPI ex Fresh Food, Energy rose by 2.2% YoY in November compared to 1.8% previously. The Tokyo CPI ex Fresh Food increased by 2.2% YoY in November, compared to a 1.8% increase in October, and was above market consensus of 2.1%.
The core CPI remained above the Bank of Japan's (BOJ) target of 2% and maintained market expectations for a near-term interest rate hike. This, in turn, boosted the JPY and created a headwind for USD/JPY. BoJ Governor Kazuo Ueda said the Japanese central bank will continue to raise interest rates if inflation remains on track to steadily reach 2% as projected.
On the other hand, Wednesday's US PCE data indicated that progress in lowering inflation appears to have stalled in recent months, which could dampen expectations for the Federal Reserve (Fed) to cut interest rates in 2025. This may have triggered a modest rise in US Treasury yields, providing some support for the greenback. Markets are now pricing in a near 62.8% chance that the Fed will cut rates by a quarter-point in December, up from 55.7% earlier this week, according to the CME FedWatch Tool.
Source: FXSTreet
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