On Friday (November 29th), in the morning session of the Asian market, the USD/JPY fell sharply and has now fallen to around 150.60, a drop of 90 points for the day. Analysts pointed out that the higher than expected Tokyo CPI has fueled the Bank of Japan's December interest rate hike bet, which has boosted the trend of the yen.

Bloomberg reported that inflation in Tokyo has accelerated this month as the Japanese government reduces energy subsidies, and overall data shows that Japan's price growth trend remains largely consistent with the Bank of Japan's forecast.

(Screenshot source: Bloomberg)

On Friday, data showed that the Tokyo Core Consumer Price Index (CPI) rose 2.2% year-on-year in November, higher than last month's 1.8% and stronger than economists' expectations of 2%.

Due to the increase in food prices, the overall inflation rate has accelerated to 2.6%. After the report was released, the Japanese yen rose sharply against the US dollar.

Bloomberg reported that this leading indicator of the national trend may continue to make market participants speculate that the Bank of Japan will raise interest rates next month, as it indicates that Japan's inflationary momentum still exists.

(Screenshot source: Bloomberg)

Bank of Japan Governor Kazuo Ueda has repeatedly stated that if the economic performance meets the bank's expectations, it will increase borrowing costs.

Another report released on Friday showed that the job market remains relatively tight, with the job seeking ratio rising to 1.25 in October and the unemployment rate slightly increasing to 2.5%.

Friday's Tokyo CPI data is the last government inflation report before the Bank of Japan decided on the benchmark interest rate on December 19th.

Last week, Kazuo Ueda said that the outcome of the meeting could not be predicted and hinted that the next meeting would have on-site discussions on whether to raise interest rates.

The well-known financial website Forexlive commented that after the release of the Tokyo CPI, the US dollar/Japanese yen has fallen, which is solid evidence supporting the Bank of Japan's interest rate hike at its meeting on December 18-19.

Bloomberg economist Taro Kimura said, "The Tokyo CPI report may strengthen the Bank of Japan's belief that inflation momentum is forming and the 2% target looks increasingly safe

The 0.25% policy interest rate of the Bank of Japan is expected to change soon. Prior to the release of Tokyo CPI data, a series of recent economic data, including GDP, showed that the Japanese economy was in a moderate recovery phase.