Yen Rises Amid Risk Aversion

The Japanese yen strengthened against other major currencies in the Asian session on Friday, as Asian stocks traded lower following the sell-off on Wall Street overnight, on renewed concerns over the outlook for interest rates, with the likelihood of a rate cut in June remaining uncertain. Higher energy prices will keep inflation elevated and convince the U.S. Fed to hold off on lowering interest rates.

In latest remarks, Minneapolis Fed President Neel Kashkari stated on Thursday that should inflation persistently stall, there may be no necessity for rate cuts.

CME Group's FedWatch Tool is still indicating a 66.4 percent chance the Fed will cut rates by a quarter point in June, but a 32.2 percent chance rates will remain unchanged.

In economic news, data from the Ministry of Internal Affairs and Communications showed that the average household spending in Japan was down 0.5 percent on year in February, standing at 279,868 yen. That beat expectations for a decline of 2.8 percent following the 6.3 percent slide in January.

On a monthly basis, household spending rose 1.4 percent - again exceeding expectations for a gain of 0.5 percent after slumping 2.1 percent a month earlier.

Data from the Cabinet Office showed that Japan's leading index improved in February to the highest level in one-and-a-half years. The leading index, which measures future economic activity, rose more-than-expected to 111.8 in February from 109.5 in the previous month. The score was forecast to increase to 111.6.

In the Asian trading today, the yen rose to 2-day highs of 163.49 against the euro and 190.68 against the pound, from yesterday's closing quotes of 163.97 and 191.28, respectively. If the yen extends its uptrend, it is likely to find resistance around 162.00 against the euro and 189.00 against the pound.

Against the U.S. and the Canadian dollars, the yen advanced to more than a 2-week high of 150.81 and an 8-day high of 111.28 from Thursday's closing quotes of 151.33 and 111.72, respectively. The yen may test resistance near 147.00 against the greenback and 109.00 against the loonie.

The yen edged up to 167.28 against the Swiss franc, from yesterday's closing value of 167.86. On the upside, 164.00 is seen as the next resistance level for the yen.

Against the Australia and the New Zealand dollars, the yen climbed to 2-day highs of 99.20 and 90.81 from yesterday's closing quotes of 99.68 abd 91.16, respectively. The next possible upside target level for the yen is seen around 97.00 against the aussie and 89.00 against the kiwi.

Looking ahead, U.K. S&P construction PMI for March and Eurozone retail sales data for February are due to be released in the European session.

In the New York session, Canada and U.S. jobs data for March, U.S. used car prices for March, Canada Ivey PMI for March and U.S. Baker Hughes oil rig count data are slated for release.

At 9:15 am ET, LINTHICUM Heights, Md. - Federal Reserve Bank of Richmond President Thomas Barkin is scheduled to speak before the Greater Baltimore Committee "Pulse Check: The Scorecard Summit 2024," in Linthicum, Maryland, U.S.

At 12:15 pm ET, Federal Reserve Board Governor Michelle Bowman will speak on "Risks and Uncertainty in Monetary Policy: Current & Past Considerations" before the Shadow Open Market Committee Spring Meeting, in New York, U.S.