SINGAPORE/TOKYO : Asian stocks rose on Friday as investors cheered a slowdown in U.S. inflation, while the yen hit a seven-month high and Japanese bond yields broke above the central bank's target as markets challenged Tokyo's commitment to loose monetary policy.
A newspaper report flagging the possibility of more flexibility has redoubled bets on a coming shift out of ultra-easy policy that seeks to pin yields near zero. "I think it's too early for the BOJ to give up," he added."It still has ammunition to defend the 0.5 per cent yield cap." The BOJ will likely raise its inflation forecasts next week and debate whether further steps are needed, sources familiar with the bank's thinking told Reuters.Beyond Japan, market sentiment was dominated by overnight U.S. December inflation data that landed more or less on consensus expectations. The annual pace of headline consumer price rises slowed to 6.5 per cent in December from 7.1 per cent in November.
The Nasdaq hit a one-month high. The U.S. dollar dropped 0.9 per cent to a nine-month low of $1.0868 per euro and the risk-sensitive Australian dollar rose to a roughly five-month high at $0.6984.