Japanese Yen Gains as Inflation Surprises

Hello traders, welcome to Friday. We’re wrapping up the last week of November with a market still buzzing with activity despite the Thanksgiving holiday in the U.S. on Thursday, which significantly reduced liquidity and trading volumes. While American markets were quiet, European and Asian sessions have been lively, setting the tone for an engaging end to the week.

Thursday was subdued in the U.S. due to the Thanksgiving holiday, but we saw meaningful movements elsewhere. German preliminary CPI data met expectations at -0.2%, confirming a decline in inflation. In Japan, Tokyo core CPI exceeded expectations, coming in at 2.2%. This higher-than-expected inflation number bolstered the Japanese yen, pushing it to new midterm highs against major currencies.

Commodities were mixed, with oil continuing its bearish trajectory. Metals, on the other hand, displayed resilience. Gold and silver staged a small recovery after starting the week on the back foot, hinting at a possible bullish shift as we approach December. Indices, particularly in Europe, remained largely directionless, trapped in a sideways range, as investors waited for more concrete catalysts.

Friday morning brings heightened volatility in certain markets, driven largely by fresh economic data. Tokyo’s inflation report has kept the Japanese yen strong, making it the best-performing currency of the week. Pairs like USD/JPY and EUR/JPY are testing significant midterm lows, reflecting this yen strength. Meanwhile, the Canadian dollar and Australian dollar are among the weakest currencies, with traders awaiting Canada’s GDP report later in the day. This GDP figure, expected at 0.3%, will likely provide direction for CAD pairs.

On the commodities front, oil remains under bearish pressure, extending its decline into Friday’s trading session. Metals like gold and silver are attempting to build on their midweek recovery, but sentiment is cautious. Traders will be closely watching these markets as the week concludes.

Indices are entering Friday with a cautious tone. U.S. futures are slightly green after Thursday’s muted session, while European indices are mixed. The S&P 500 and NASDAQ are hovering near key support levels, with traders speculating on whether the anticipated “Santa Rally” will materialize in December. Meanwhile, European indices like the DAX remain underperformers, awaiting stronger catalysts.

As we approach the final trading sessions of November, all eyes are on how markets will close out the month and prepare for the seasonal trends of December. Good luck with your trading today!

Source: https://www.axiory.com/analytics/market-news/japanese-yen-gains-as-inflation-surprises