Yen rallies on rate hike bets as equity markets swing

HONG KONG, China — The yen rallied Friday after forecast-busting inflation data out of Tokyo boosted talk of another Japanese interest rate cut next month, while equity markets were mixed as traders weigh the economic outlook during a second Trump administration.

With Wall Street closed for the Thanksgiving break, there were few catalysts to drive business heading into the weekend and at the end of a rollercoaster month dominated by uncertainty in the wake of Donald Trump's election victory.

Traders are tracking developments surrounding the tycoon as he builds a hawkish cabinet and outlines his plans, including a threat to hammer China, Canada and Mexico with hefty tariffs on his first day.

Eyes were also on Japan, where figures showed consumer prices in Tokyo -- seen as a bellwether for the country -- jumped to 2.6 percent in November, well up from October and much more than expected.

The news ignited speculation the central bank will hike rates for a third time this year.

Expectations for an increase in borrowing costs have picked up pace in recent weeks after Bank of Japan governor Kazuo Ueda said officials would have to tighten policy if the economy continued to perform in line with forecasts.

Friday's price data came as separate figures showed the jobs market remained tight. Bets on a rate increase have risen to more than 60 percent, according to Bloomberg News.

The yen rallied Friday, hitting less than 150 per dollar for the first time in a month.

The currency was also supported by forecasts that the Federal Reserve will lower US rates at its December meeting -- narrowing the yield differential and making the Japanese unit more attractive to investors.

The report "will probably strengthen the BoJ's conviction that inflation momentum is building, with its two percent target looking (increasingly) secure", said Taro Kimura, an economist with Bloomberg Economics.

The BoJ hiked rates in March for the first time in 17 years as it looked to move away from a long-running ultra-loose monetary policy.

However, a second surprise lift at the end of July sparked turmoil on markets and led to a major unwind of the so-called "yen carry trade" in which investors used the