More upside: People along a shopping area in Osaka. A strong Tokyo consumer price index reading point to further strengthening of the yen, an analyst says. — AFP
TOKYO: The yen strengthened last Friday as Tokyo inflation data exceeded estimates.
Asian stocks also rose.
Shares in China gained amid speculation that Beijing would provide more support for the economy at a key policy meeting later this month.
The nation also extended tariff exemptions on some American items, implying it may be less willing to take a hard line amid US trade tensions.
US markets were closed last Thursday for the Thanksgiving holiday.
Shares in Australia and Japan fell, while South Korea’s declined most in the region as a surprise interest-rate cut by the central bank shifted investor focus to slowing economic growth.
MSCI’s regional equity gauge rose 0.5% last Friday, though was on track for a second straight monthly loss.
The yen rose to the highest level in more than a month against the greenback, strengthening past 150.
The US dollar slipped against major currencies, with an index of greenback strength headed for its first weekly decline in two months. US Treasury yields fell as cash trading in Asia resumed.
The moves underscored the muted appetite for risk across global markets during a week that is typically marked by lower volumes due to the US holiday.
Month-end positioning may also prompt some investors to rebalance portfolios after a record high for American stocks last week.
Gains for Japan’s currency were helped by Tokyo inflation data that showed prices rose more than expected on a headline basis, but broadly in line with estimates once fresh food and energy were excluded.
Swaps market pricing indicates a more than 60% chance the Bank of Japan (BoJ) will raise interest rates when it meets this month.
“The strong Tokyo consumer price index reading looks to have again supported further strengthening,” said Alan Lau, forex strategist at Malayan Banking Bhd
.
“With a BoJ December 25 basis point hike looking increasingly likely, we see that US dollar/yen would sustainably break below the key 150 support and move lower to test the 142 level where it had failed to decisively go below in September,” Lau said.
Japan may also delay a decision on raising taxes to help cover rising defence spending, a senior ruling coalition official said.
China’s health-care stocks gained after the latest national reimbursement drug list results from the body overseeing national medical insurance.
Among the new entrants, a record 38 are innovative medicines. The nation’s food, beverage and dining stocks also advanced after officials held a meeting to boost consumption.
Indonesia’s benchmark stock index fell about 10% from its year’s high, heading for a technical correction brought on by slowing economic growth and regional uncertainties after Donald Trump’s win in the US election.
Australian 10-year bond yields were flat after Reserve Bank governor Michele Bullock said core inflation remains too high and pushed back on expectations of near-term rate cuts. The Australian dollar strengthened against the greenback last Friday. — Bloomberg
