Euro climbs above 160 yen for first time in 15 years

Euro rose in European trade against a basket of major rivals, extending gains for the second straight session against yen and trading above the psychological barrier of 160 yen for the first time in 15 years.

Such aggressive gains came after inflation data showed core prices were still naggingly  high, even as they slowed down slightly. 

Such data shows the European Central Bank's fight with inflation is far from over, and it'll likely need to maintain interest rates high for an extended duration.

Conversely, Bank of Japan recently asserted its commitment to the ultra-easy monetary policies to support the world's third largest economy. 

EUR/JPY

EUR/JPY rose 1.7% to 160.85 yen, the highest since August 2008, with a session-low at 158.10.

EUR/USD rose 0.1% yesterday, the second profit in three days following upbeat German GDP data.

European Inflation 

Euro zone consumer prices rose 2.9% y/y in October, the slowest pace since July 2021, and below estimates of 3.1%. 

However, core prices rose 4.2% in October, same as expected. 

Such data showcases the resistance of core prices to slow down compared to overall prices, as core prices remain nearly double the normal range. 

Deutsche Bank analysts noted the need to control wages inflation in the euro zone, which could take six more months from the ECB. 

Analysts believe the solid core inflation rates in the euro zone will provide support to euro zone treasury yields, in turn underscoring euro. 

Bank of Japan 

As expected, Bank of Japan voted to maintain interest rates unchanged this week at minus 0.1%.

The BoJ also maintained its target 10-year treasury yield at 0%, while allowing an upper limit of 1%. 

The BoJ asserted it'll give treasury yields more leeway to move freely up and down flexible ranges. . 

The BOJ said it's still appropriate for current monetary policies to remain unchanged to support economic recovery, while continuing to aggressively purchase government bonds.