FX.co ★ Yen Steadies After Hot Tokyo Inflation Data

The Japanese yen edged up to just below 158 per dollar on Friday, paring recent losses after data showed Tokyo’s core inflation quickened to 2.7% in September, surpassing the Bank of Japan’s 2% target for the first time in nine months. Still, a summary of opinions from the BOJ’s September meeting contained fewer hawkish signals than markets had expected. While the summary indicated that policymakers are shifting their focus toward preventing inflation from overshooting the target—implying the likelihood of another rate hike this year—it offered little guidance on the timing. The yen also remained on course for a third straight weekly decline, weighed down by a stronger US dollar and elevated US Treasury yields amid expectations that the Federal Reserve may need to raise interest rates further to curb energy-driven inflation. This dynamic underscores the potential for a wider US–Japan interest-rate differential, as the Fed’s tightening cycle continues to outpace the BOJ’s gradual normalization.