Yen Slides After Japan Tokyo CPI Data

(RTTNews) - The Japanese yen weakened against other major currencies in the European session on Friday, following the release of lesser-than-expected Tokyo overall inflation data in September.

Data from the Ministry of Internal Affairs and Communications showed that overall inflation in the Tokyo region of Japan was up 2.5 percent on year in September. That was shy of expectations for an annual increase of 2.6 percent, which would have been unchanged from the August reading.

Core CPI, which excludes the volatile cost of food, also was up 2.5 percent on year. That missed forecasts for an increase of 2.6 percent but was unchanged from the previous month's reading.

The Bank of Japan's (BoJ) argument for additional interest rate hikes has made more difficult by the reduction in inflation, even if price growth is still above its 2% target.

Furthermore, the BoJ may be able to postpone hiking interest rates due to political unpredictability in Japan ahead of the October 4 Liberal Democratic Party (LDP) leadership election, which could put some selling pressure on the JPY.

In the European trading today, the yen declined to a 14-month low of 175.02 against the euro and a record low of 187.53 against the Swiss franc, from early highs of 174.64 and 187.09, respectively. If the yen extends its downtrend, it is likely to find support around 176.00 against the euro and 188.00 against the franc.

Against the pound and the U.S. dollar, the yen dropped to 200.21 and 149.89 from early highs of 199.70 and 149.62, respectively. The yen may test support near 201.00 against the pound and 150.00 against the greenback.

Looking ahead, Canada GDP data and wholesale sales data for August, U.S. Core PCE price index for August, personal income and spending for August, U.S. University of Michigan's consumer sentiment for September and U.S. Baker Hughes oil rig count data are slated for release in the New York session.