The Euro extended its losses against the Japanese Yen on Friday, slipping to a two-week low around 175.20. The Yen gained broad strength after a series of hawkish comments from Bank of Japan (BoJ) officials boosted expectations of further policy tightening.
BoJ Deputy Governor Shinichi Uchida stated that Japan’s economy is “recovering moderately” and signaled the central bank could raise rates further if economic conditions continue to improve. His remarks followed comments from Governor Kazuo Ueda, who said in Washington that the BoJ would “adjust the degree of monetary easing” once confidence in achieving its inflation target strengthens.
These statements have fueled speculation that the BoJ may deliver another rate hike in the coming months — likely in December rather than October — widening the policy gap with major central banks that are expected to maintain or cut rates. This divergence continues to lend support to the Yen.
In Europe, political stability in France provided limited relief to the Euro after Prime Minister Sébastien Lecornu survived two unexpected no-confidence votes. Market attention now turns to the upcoming Eurozone Harmonized Index of Consumer Prices (HICP) report, due later Friday, which is anticipated to confirm a mild acceleration in inflation for September.
