Yen Falls Ahead Of Japan Election

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Friday, as traders remain uncertain about Japan's upper house election and consider the fiscal implications of this weekend's vote. Meanwhile, the country's 40-year government bond yield experienced a notable decline.

Some reports suggested that Japan local banks were more concerned about the country's credit rating. Asian shares traded higher, as traders react to upbeat economic data from the U.S. and Japan that renewed optimism about the global economy. Countries are also hustling to strike trade deals with the U.S. as the August 1 deadline for pausing of "reciprocal tariffs" is less than a fortnight away.

Data showed U.S. retail sales rebounded by much more than expected in the month of June and import prices in the U.S. inched up by less than expected in the month of June.

In other economic news, data from the Ministry of Internal Affairs and Communications showed that Japan's inflation softened more than expected in June but continued to remain above the 2 percent target. Core inflation that excludes fresh food cost eased to 3.3 percent in June from 3.7 percent in May, which was the highest in two years.

Meanwhile, excluding fresh food and fuel, inflation rose marginally to 3.4 percent from 3.3 percent in the previous month.

Monthly, the CPI edged up 0.1 percent, after a 0.3 percent increase in May.

Despite the slowdown, underlying inflation remained elevated strengthening calls for further interest rate hikes.

The Bank of Japan had raised its policy rate by a quarter-point in January to the current 0.5 percent. The next monetary policy announcement is due on July 31.

In the Asian trading today, the yen fell to 2-day lows of 172.89 against the euro, 199.75 against the pound and against the Swiss franc, from yesterday's closing quotes of 172.43, 199.39 and 184.90, respectively. If the yen extends its downtrend, it is likely to find support around 174.00 against the euro, 200.00 against the pound, 186.00 against the franc

Against the U.S. and the Canadian dollars, the yen slid to 148.84 and 108.35 from Thursday's closing quotes of 148.85 and 108.08, respectively. The yen is likely to find support around 149.00 against the greenback and 109.00 against the loonie.

Looking ahead, U.S. building permits and housing starts for June, U.S. University of Michigan's consumer sentiment index for July and U.S. Baker Hughes oil rig count data are slated for release in the New York session.