German and French inflation data slows further, reinforcing ECB rate pause expectations while Japan’s pension reform plans boost the Yen.
EUR/JPY dropped 0.35% to 184.95 on Friday as the Euro weakened against a resurgent Yen. Cooling inflation in Germany and France, with HICP rising 2.4% YoY in June from 2.7% in May, and French CPI slowing to 2% from 2.8%, weighed on the single currency.
The data aligns with market expectations that the ECB will hold rates steady in July. Policymakers are monitoring energy market developments and their impact on the Eurozone economy. Meanwhile, Japan’s government signaled plans to increase domestic investment, including a potential shift in the Government Pension Investment Fund’s strategy.
Finance Minister Satsuki Katayama indicated a push for higher allocations to Japanese assets, supporting the Yen’s gains. Markets had largely priced in the ECB’s stance, limiting the Euro’s downside.