Forex - Yen weakens sharply as CPI highlights weak economy

Investing.com - The Japanese yen weakened smartly on Friday after a mixed set of key data that reflected a sharp drop in crude oil prices and weak domestic demand that cast doubts on the Bank of Japan's efforts to achieve its 2% inflation target with the economy in recession.

USD/JPY traded at 118.24, up 0.42%, while AUD/USD changed hands at 0.8510, down 0.37%. EUR/USD traded at 1.2452, down 0.14%.

October national core CPI in Japan rose 2.9%, meeting expectations, marking a 17th straight year-on-year rise, but at the slowest pace since an April sales tax hike.

The unemployment rate dipped to 3.5%, beating an expected 3.6% level and household spending dropped 4%, beating an expectation of a decline of 4.8% year-on-year in real terms, but still a seventh consecutive year-on-year drop.

October retail sales gained 1.4%, lower than an expected 1.5% drop on year for a fourth straight year-on-year rise, but slower than 2.3% gain in September. And industrial output gained 0.2% month-on-month.

Later in the day, October housing starts are due at 1400 (0500 GMT). Housing starts are forecast at a decline of 14.5% on year, an eighth straight fall.

In Australia, the RBA's private sector credit rose 0.6% and investor housing credit gained 1.0%. Private sector credit was expected to show a 0.5% month-on-month rise in October.

The slew of month-end data in Asia for the final trading day of November also included October building approvals in New Zealand that rose 8.8% month-on-month, reversing a 12.2% fall in the previous month.

NZD/USD fell 0.29% to 0.7846 after the data.

Late Thursday, members of the oil producing group met in Vienna on Thursday and agreed to maintain their existing production limit of 30 million barrels a day, although some OPEC members often exceed their production quotas.

The 12 member countries on Thursday said they would comply with the limit, which might lead to a decline in production of about 300,000 barrels a day, according to OPEC's own data.

In response, light, sweet oil for January delivery fell $4.64, or 6.3%, to $69.05 a barrel as electronic trading on the New York Mercantile Exchange halted for the day. This was the lowest level since May 2010. The Nymex floor was closed Thursday in observance of Thanksgiving and will reopen on Friday, while electronic trading was halted at 1 p.m. EST and will resume at 6 p.m. EST. Brent, the global benchmark, fell $4.93, or 6.3%, to $72.82 a barrel on the ICE Futures Europe exchange.

Overnight, the dollar remained broadly higher against a basket of other major currencies on Thursday, as trade volumes were expected to remain light with U.S. markets closed for the Thanksgiving holiday.

The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, added 0.18% to 88.17.

The dollar weakened broadly on Wednesday after data showed that U.S. initial jobless claims rose to the highest level since early September last week, while personal spending rose less than expected.

Durable goods orders rose in line with forecasts, but core durable goods orders fell unexpectedly.

Other reports showed that U.S. consumer sentiment was revised lower, manufacturing activity in the Chicago region slowed and data from the housing sector was mixed.