Euro flattens against the Japanese Yen in countdown to Eurozone HICP data

The Euro (EUR) trades flat against the Japanese Yen (JPY) at around 177.60 during the Asian trading session on Friday, but the pair is close to its fresh over 10-month low of 176.66 posted the previous day.

The Japanese currency broadly outperforms on Friday as Tokyo Consumer Price Index (CPI) data for September remains stronger-than-expected, reinforcing expectations of more interest rate hikes by the Bank of Japan (BoJ) in the near term.

Tokyo CPI ex. Fresh Food arrives at 2.7% Year-on-Year (YoY), higher than 2.4% estimates and the previous reading of 1.8%. The headline inflation accelerates to 2.7% from 1.9% in August.

The BoJ Summary of Opinions of the September policy meeting on Thursday showed that several policymakers argued in favor of tightening monetary conditions further, adding that “focus must be on anchoring underlying inflation near 2%”.

Meanwhile, the Euro is expected to trade cautiously as surging government bond yields in France due to accelerating public debt could prompt fiscal concerns. According to a report from Associated Press (AP), the public debt in France now stands at 119% of Gross Domestic Product (GDP), which has pushed 10-year France bond yields to 4.96%. This is the highest level seen since August 2002.

In response, France’s Finance Minister Roland Lescure has vowed to put public finances back on track for budget consolidation, aiming to reduce its budget deficit from a target of 5% of economic output next year to the European Union limit of 3% by 2029, Reuters report.

On the economic data front, investors await the Eurozone preliminary Harmonized Index of Consumer Prices (HICP) data for September, which will be published at 09:00 GMT.