Japanese yen firms on strong inflation, dollar muted before payrolls test

The Japanese yen strengthened slightly on Friday following robust Tokyo inflation data, which increased expectations for additional Bank of Japan interest rate hikes, while the dollar remained relatively stable before releasing key labor statistics. Asian currencies experienced minimal movement due to a Chinese market holiday, surging U.S. Treasury yields, and elevated oil prices.

Oil prices jumped this week following reports of limited progress towards a U.S.-Iran peace deal, with Washington potentially planning more strikes against Tehran in the coming months. The South Korean won remained flat after slightly softer-than-expected consumer inflation, while the Indian rupee plummeted towards record lows.