Yen Slides Amid Reduced BoJ Rate Hike Speculation

(RTTNews) - The Japanese yen weakened against other major currencies in the European session on Friday, as expectations for an immediate Bank of Japan (BoJ) rate hike are reduced by softer Tokyo CPI prints.

The JPY's safe-haven character is further enhanced by worries about Japan's financial situation in light of Prime Minister Sanae Takaichi's reflationary plans and political unpredictability ahead of the February 8 snap election.

The headline Consumer Price Index (CPI) in Tokyo, the capital of Japan, rose 1.5% in January, the lowest reading since February 2022, according to a government data published earlier this Friday.

Furthermore, a measure that excludes both fresh food and energy prices decreased to 2.4% in January from 2.6% in December, while the core CPI inflation, which does not include volatile fresh food prices, fell to 2% from 2.3% in December.

In other economic news, data from the Ministry of Economy, Trade and Industry showed that the industrial production in Japan was down a seasonally adjusted 0.1 percent on month in December. That beat forecasts for a drop of 0.4 percent following the 2.7 percent decline in November.

On a yearly basis, industrial production was up 2.6 percent.

Upon the release of the data, the METI maintained its assessment of industrial production, saying that it continues to fluctuate indecisively.

Also, retail sales slumped 0.9 percent on year in December, well shy of expectations for an increase of 0.7 percent following the gain of 1.1 percent in November.

In the European trading today, the yen fell to a 4-day low of 183.88 against the euro, a 3-day low of 154.39 against the U.S. dollar and a 1-week low of 200.59 against the Swiss franc, from early highs of 183.05, 153.08 and 199.83, respectively. If the yen extends its downtrend, it is likely to find support around 187.00 against the euro, 159.00 against the greenback and 201.00 against the franc.

Against the pound and the Australian dollar, the yen edged down to 212.05 and 107.97 from early highs of 211.31 and 107.30, respectively. On the downside, 215.00 against the pound and 110.00 against the aussie are seen as the next support level for the yen.

Against the New Zealand and the Canadian dollars, the yen slid to 1-week lows of 93.34 and 114.00 from early highs of 92.78 and 113.50, respectively. The yen is likely to find support around 95.00 against the kiwi and 115.00 against the loonie.

Looking ahead, German CPI data for January, Canada GDP data for November, U.S. PPI for December, U.S. Chicago PMI for January and U.S. Baker Hughes oil rig count data are slated for release in the New York session.