Yen Rises On Strong Tokyo Core Inflation Data

(RTTNews) - The Japanese yen strengthened against other major currencies in the Asian session on Friday, as Tokyo's core inflation data came in stronger than expected, increasing the chances of the Bank of Japan's (BoJ) 25 basis point rate hike in July.

Data from the Ministry of Internal Affairs and Communications showed that the overall inflation in the Tokyo region of Japan was up 3.4 percent on year in May. That matched forecasts and easing from 3.5 percent in April.

Core CPI was up an annual 3.6 percent, exceeding expectations for 3.5 percent and up from 3.4 percent in the previous month.

Investors also digested other important data on factory output, retail sales and unemployment.

Data from the Ministry of Internal Affairs and Communications also showed that the unemployment rate in Japan came in at a seasonally adjusted 2.5 percent in April. That was in line with expectations and unchanged from the March reading.

The jobs-to-applicant ratio was 1.26. in line with forecasts and steady from the previous month. The participation rate improved to 63.7 percent, up from 63.3 percent a month earlier.

Data from the Ministry of Economy, Trade and Industry showed that the industrial production in Japan was down 0.9 percent on month in April. That beat forecasts for a decline of 1.4 percent following the 0.2 percent increase in March.

On a yearly basis, industrial production was up 0.7 percent.

The METI also showed that the value of retail sales in Japan was up 3.3 percent on year in April, coming in at 12.925 trillion yen. That beat forecasts for n increase of 2.9 percent and was up from 3.1 percent in March.

In other economic news, data from the Ministry of Land, Infrastructure, Transport, and Tourism showed that Japan's housing starts decreased sharply in April after a surge in the previous month.

Housing starts slumped 26.6 percent year-on-year in April, reversing a 39.1 percent growth in March. Economists had expected a decrease of 18.3 percent.

The Asian shares traded lower, due to uncertainty surrounding a court battle about U.S. President Donald Trump's tariffs and rising concerns about U.S. economic stability.

In the Asian trading today, the yen rose to 2-day highs of 163.12 against the euro and 174.66 against the Swiss franc, from yesterday's closing quotes of 163.55 and 174.87, respectively. If the yen extends its uptrend, it is likely to find resistance around 161.00 against the euro and 172.00 against the franc.

Against the pound and the U.S. dollar, the yen advanced to 3-day highs of 193.63 and 143.44 from Thursday's closing quotes of 194.06 and 143.75, respectively. On the upside, 191.00 against the pound and 140.00 against the greenback are seen as the next resistance level for the yen.

Against the Australia and the Canadian dollars, the yen climbed to 3-day highs of 92.37 and 103.90 from yesterday's closing quotes of 92.64 and 104.12, respectively. The next possible upside target for the yen is seen around 90.00 against the aussie and 102.00 against the loonie.

The yen advanced to a 2-day high of 85.74 against the NZ dollar, from yesterday's closing value of 85.91. On the upside, 83.00 is seen as the next resistance level for the yen.

Looking ahead, Destatis is slated to issue flash consumer price data for May is due to be released at 8:00 am ET. German inflation is expected to slow marginally to 2.0 percent from 2.1 percent in April.

In the New York session, Canada GDP data for March, U.S. personal income and spending data for April, U.S. goods trade balance for April, U.S. PCE price index for April, U.S. retail and wholesale inventories for April, U.S. Chicago PMI for May, U.S. University of Michigan's consumer sentiment for May and U.S. Baker Hughes oil rig count data are slated for release.