Ella 
During the Asian session on Friday, EUR/JPY fluctuated lower to around 156.20, continuing to be supported by hawkish signals from the Bank of Japan. The Bank of Japan said it may raise interest rates further if the economic outlook is in line with expectations.
Fitch Ratings’ latest report on the Bank of Japan’s policy outlook shows that the Bank of Japan may raise interest rates to 0.5% by the end of 2024, to 0.75% by the end of 2025, and to 1.0% by the end of 2026. . The Bank of Japan deviated from the global trend of policy easing, raising interest rates more than expected in July. The move underscores Japan’s growing confidence that it is well-established in responding to the economic boom.
On Thursday, hawkish Bank of Japan policymaker Naoki Tamura said the Bank of Japan should raise interest rates to at least 1% as early as the second half of the next fiscal year. The comments reinforced the Bank of Japan’s commitment to continue tightening monetary policy. According to Reuters, Tamura noted that the likelihood that Japan’s economy will sustainably meet the Bank of Japan’s 2% inflation target is increasing, indicating that conditions are becoming more mature for further interest rate hikes.
The European Central Bank (ECB) cut the interest rate on its main refinancing operations by 25 basis points to 4.0% on Thursday. In addition, ECB policymaker and Bundesbank President Joachim Nagel mentioned in an interview with Deutsche Welle earlier on Friday that “core inflation is also moving in the right direction.” fluctuation”.
Traders were awaiting euro zone industrial production data due later today. Eurozone industrial production is expected to record a monthly rate of -0.3% in July, down from -0.1% previously. At the same time, the annual rate is expected to record -2.7%, an increase from the previous value of -3.9%.
