Yen steady as Japanese inflation dips – heochaua

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<li>Japanese core inflation falls to 2.5%, as expected</li>
<li>US to release PCE Price Index on Friday</li>
</ul>
<p>The Japanese yen is showing little movement on Friday. In the European session, USD/JPY is trading at 142.03, down 0.06%.</p>
<p><strong>Japanese core inflation eases to 2.5%</strong></p>
<p>Japan&#8217;s Core CPI, which excludes fresh fuel but includes fuel costs, dropped to 2.5% in November, matching the consensus estimate. This was down from the October gain of 2.9% and marked the lowest reading since July 2022. Still, it was the twentieth consecutive month that the core rate has exceeded the Bank of Japan&#8217;s target of 2%. The headline figure dropped to 2.8%, down from 3.3% in October.</p>
<p>The yen shrugged off the drop in inflation, taking a breather after surging 1% a day earlier. The sharp gains were driven by the third-estimate US GDP for Q3, which came in at 4.9%, lower than the second estimate of 5.2%. The drop in GDP was driven by weaker consumer spending, but the economy remains strong, as the 4.9% gain was the highest level since Q4 2021.</p>
<p>The BoJ released on Friday the minutes of its October 31 meeting, when the central bank unexpectedly tweaked its yield curve control (YCC) program. The yen took a bath and fell 1.78% on the day of the meeting, as the markets viewed the move as a step by the BoJ&#8217;s to phasing out its ultra-easy monetary policy. The minutes indicated that board members were divided on whether the BoJ should make clear that the tweak was not a step towards ending YCC, or should the Bank &#8220;not strongly deny&#8221; that the tweak could lead to an end of YCC. The debate highlights that board members are well aware that a shift in policy can have a significant impact on the currency markets, as was evident with the yen&#8217;s plunge following the October meeting.</p>
<p>The US wraps up the week with the PCE Price Index, which is considered the Federal Reserve&#8217;s preferred inflation indicator. The headline and core readings are expected to remain unchanged in November, at 0.2% and 0%, respectively. Recent inflation readings have had a strong impact on the movement of the US dollar, and that could be the case later today if the headline or core rate readings are wide of the estimates.</p>
<p>.</p>
<p><strong>USD/JPY Technical</strong></p>
<ul>
<li>USD/JPY has support at 141.57 and 141.03</li>
<li>There is resistance at 142.60 and 143.14</li>
</ul>
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