- Japanese Yen (JPY) falls for a third day
- Tokyo inflation was hotter than expected at 2.4%
- US Dollar (USD) rises versus its major peers
- Core PCE remains at 2.6% & personal spending increases
The US Dollar Japanese Yen (USD/JPY) exchange rate rose for a third day on Friday. The pair rose 0.28% in the previous session, settling on Thursday at 144.98. At 22:00 UTC, USD/JPY trades +0.83% at 146.18 and is in a range of 144.66 to 146.25. The pair is on track to rise this week for a third straight week.
The Japanese yen fell on the day against the US dollar and fell across the week despite Tokyo inflation coming in hotter than expected.
Tokyo inflation, which is representative of Japanese inflation showed that consumer prices rose by 2.4% year on year, up from 2.2% and ahead of expectations.
Hotter-than-expected inflation figures give the Bank of Japan more headroom to raise interest rates when it meets next.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback versus a basket of major currencies, trades at 101.68 at the time of writing, down 0.34%, marking a third day of gains.
The U.S. dollar is rising after the US inflation data supported a rate cut by the Federal Reserve, and personal spending figures helped calm recession fears. US core PCE rose 2.6% year on year in July, in line with the previous reading and slightly below expectations of 2.7%
The data supports the view that the Federal Reserve will start cutting interest rates next month.
Meanwhile, personal spending increased 0.3%, up from 0.2% in the previous month. The data, combined with yesterday’s upward revision of GDP figures, helped to calm recession fears sparked earlier in the month.
Attention is now turning to the labor market after Federal Reserve chair Jerome Powell said last week that he was comfortable that inflation was cooling towards the target but instead highlighted the possible risks to the labor market.
Next week, US nonfarm payroll data will likely be the next big test for the US dollar, which could either confirm, rebar or refute recession fears.
