Euro dips as weak Eurozone data, BoJ tightening bets bolster Japanese Yen

  • EUR/JPY loses 0.13% on Friday as European economic data paints a mixed picture.
  • Eurozone Retail Sales declined 0.7% in September, significantly worse than the expected 0.1% drop.
  • The Japanese Yen benefits from expectations of a December interest rate hike in Japan and broader risk aversion.

EUR/JPY trades lower on Friday, losing 0.13% on the day to hover around 176.80 at the time of writing. The pair faces pressure from mixed economic data in the Eurozone, while the Japanese Yen (JPY) benefits from expectations of further interest rate hikes by the Bank of Japan (BoJ) and broader risk-off sentiment.

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On the European front, economic data released on Friday points to weakening consumer demand. According to Eurostat, Eurozone Retail Sales fell 0.7% MoM in September, following a revised 2% drop in August. The reading came in significantly below market expectations of a more moderate 0.1% decline. On an annual basis, Retail Sales growth also slowed to 0.4% in September, down from 1.3% in the previous month and missing the market consensus of 0.6%. These figures suggest persistent weakness in European household demand, potentially weighing on the region's economic growth outlook and limiting the recovery potential of the Euro (EUR).

Released earlier in the day, German Industrial Production increased 0.7% MoM in September, beating expectations of a flat reading and decreasing from August's revised 1% growth. The improvement was mainly driven by strong performances in the automotive and pharmaceutical sectors, while construction and machinery and equipment manufacturing recorded declines.

On the monetary policy front, European Central Bank (ECB) Chief Economist Philip Lane said on Friday that energy inflation could influence wage negotiations and price-setting across the economy. He stressed that monetary policy must contain the spillover effects of inflationary pressures while reaffirming the need to bring inflation back to the ECB's target within one to two years.

Lane also noted that financial conditions had tightened and that fiscal policy, which had been more expansionary than expected, was likely to become more restrictive from next year. Regarding upcoming ECB decisions, he adopted a cautious stance, emphasizing the need to gather more information ahead of the December meeting.

In Japan, monetary policy expectations continue to support the Japanese Yen. The minutes of the BoJ's September meeting, released on Thursday, showed that policymakers agreed on the need to continue gradually raising interest rates and adjusting the degree of monetary accommodation.

Some members even advocated a faster pace of monetary tightening, reinforcing market expectations of another potential interest rate hike as early as December. This outlook supports the Japanese currency, particularly against the Euro, as investors assess the diverging monetary policy paths of the two central banks.

Meanwhile, broader risk-off sentiment continues to favor demand for the Japanese Yen, traditionally considered a safe-haven currency. This combination of monetary policy expectations and defensive flows keeps EUR/JPY under pressure.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the New Zealand Dollar.

USD EUR GBP JPY CAD AUD NZD CHF
USD 0.39% 0.40% 0.28% 0.37% 0.85% 0.93% 0.09%
EUR -0.39% 0.01% -0.14% -0.01% 0.47% 0.53% -0.32%
GBP -0.40% -0.01% -0.13% -0.02% 0.46% 0.52% -0.33%
JPY -0.28% 0.14% 0.13% 0.12% 0.59% 0.66% -0.19%
CAD -0.37% 0.01% 0.02% -0.12% 0.47% 0.54% -0.30%
AUD -0.85% -0.47% -0.46% -0.59% -0.47% 0.07% -0.78%
NZD -0.93% -0.53% -0.52% -0.66% -0.54% -0.07% -0.83%
CHF -0.09% 0.32% 0.33% 0.19% 0.30% 0.78% 0.83%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).