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2025-10-31 17:58:50
[Is the Yen's Sharp Rise Just a "Verbal" Rebound? Tokyo Inflation Reaches 2.8%, Pressuring the Central Bank; Monthly Decline Still Reaches 4%, Worst in July] ⑴ Japan's new Finance Minister, Satsuki Katayama, expressed a "high sense of urgency" on Thursday, monitoring the foreign exchange market and retracting his March statement that "120-130 yen is reasonable." The yen surged in European trading on Friday, while the dollar rose only slightly by 0.1% against the yen to 154.28, recovering from a nine-month low. ⑵ Tokyo's October core CPI surged to 2.8%, higher than expected. The central bank's policy space narrowed after holding rates steady on Thursday, raising market concerns about escalating verbal intervention by the government. ⑶ Institutional statistics show that the yen still fell 4% against the dollar in October and hit a record low against the euro. The dollar index approached a three-month high, with risk aversion continuing to weigh on the dollar. ⑷ Fed Chair Powell's hawkish stance, with the probability of a December rate cut plummeting from over 90% to 75%, dashed expectations of a narrowing interest rate differential, making yen short sellers even more aggressive. (5) The euro rose slightly by 0.1% to $1.1572 on Friday, as the European Central Bank maintained its 2% interest rate for the third consecutive time, declaring its policy "well positioned," but the monthly decline had already reached 1.4%. (6) The pound suffered another blow: Political uncertainty surrounding UK Chancellor Reeves intensified, causing the pound to dip slightly to $1.3145 on Friday, potentially closing the month 2.3% lower. The euro rose for the fifth consecutive month against the pound, holding above 0.88 and reaching a two-and-a-half-year high, while the market eagerly awaited fiscal details but only saw a "long wait."
