The Yen Accelerates after Japan’s Inflation Hits More than Two-Decade High

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The Yen Accelerates after Japan’s Inflation Hits More than Two-Decade HighThe yen rose after data showed that inflation in April surged the most in over two decades, lowering speculation that the Bank of Japan may roll out more stimulus to boost the economy.

The yen rose 0.1 percent to trade at 101.65 versus the dollar in early trading in New York, bringing its total advance in May to 0.6 percent. The haven currency rose 0.1 percent to 138.33 per euro, resulting in a monthly gain at 2.4 percent. The euro rose 0.1 percent to $1.3609. The euro has declined 1.9 percent since end of April over speculation that the European Central Bank will boost economic stimulus in order to fight deflation when it meets next week.

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The yen’s advance against the dollar was also boosted by a decline in the U.S. 10-year Treasury yield, which touched its weakest level in nearly a year. The yield fell to 2.40 percent on Thursday, its weakest level since June 21. However, the yield rose to 2.47 percent today.

“The yen will stay very well supported,” Ian Stannard, the London-based head of European currency strategy at Morgan Stanley told Bloomberg. “Dollar-yen will come under pressure. Looking at the mix of data and policy discussion in Japan, the BOJ does seem to be content with its current policy setting.”

The Tokyo-based statistics bureau reported that consumer prices, minus fresh food prices, rose 3.2 percent from a year ago, up from 1.3 percent growth in March. Last month’s increase in consumption tax from 5 percent to 8 percent was the main driver of the growth in inflation. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com