Yen Falls After Japan CPI Data

(RTTNews) - The Japanese yen weakened against other major currencies in the European session on Friday, following the release of domestic data for February. Japan overall consumer price inflation softened in February largely due to government subsidies for energy but the increase in core inflation together with higher wage growth and services inflation put pressure on the Bank of Japan to lift key interest rates.

Data from the Ministry of Internal Affairs and Communications showed that the Japan consumer price inflation logged 3.7 percent in February, down from 4.0 percent in January. Likewise, excluding fresh food, inflation softened to 3.0 percent from 3.2 percent in the prior month.

Excluding fresh food and energy, inflation rose to 2.6 percent from 2.5 percent in the previous month.

On a monthly basis, the consumer price index edged down 0.1 percent, which was the first fall in five months.

Earlier this week, the BoJ had kept its key interest rate unchanged at around 0.5 percent after raising the rate by a quarter point in January.

The Fed, on the other hand, indicated that it will lower interest rates by 25 basis points twice before the end of this year. In addition, given the uncertainty surrounding the effects of the Trump administration's trade policy, the central bank reduced its growth projection downward. Furthermore, Fed Chair Jerome Powell stated that tariffs are probably going to slow economic expansion.

In the European trading today, the yen fell to 2-day lows of 149.66 against the U.S. dollar and 104.50 against the Canadian dollar, from early highs of 148.59 and 103.74, respectively. If the yen extends its downtrend, it is likely to find support around 151.00 against the greenback and 105.00 against the loonie.

Against the euro, the pound and the Swiss franc, the yen dropped to 162.13, 193.59 and 169.33 from early highs of 161.30, 192.67 and 168.55, respectively. The yen may test support around 165.00 against the euro, 195.00 against the pound and 171.00 against the franc.

Against the Australia and the New Zealand dollars, the yen slipped to 94.21 and 86.14 from early highs of 93.65 and 85.60, respectively. The next possible downside target for the yen is seen around 95.00 against the aussie and 87.00 against the kiwi.

Looking ahead, Canada new housing price for February, retail sales data for January and U.S. Baker Hughes oil rig count data are slated for release in the New York session.

At 11:00 am ET, the European Commission is slated to release flash euro area consumer confidence survey results. The confidence index is forecast to improve to -13.0 in March from -13.6 in February.