- The Japanese Yen (JPY) falls for a second day
- BoJ’s Ueda adopts of more dovish stance
- The US Dollar (USD) rises against its major peers
- US core PCE rose to 2.8% YoY
The US dollar Japanese yen (USD/JPY) exchange rate is rising for a second straight session. The pair rose 0.5% in the previous session, settling on Wednesday at 149.23. At 21:30 UTC, USD/JPY is +1% higher at 150.72 and trades in a range of 149.22 to 150.84.
Japanese yen has weakened after the Bank of Japan left rates unchanged at 0.5%, in line with expectations, and as Governor Ueda adopted a dovish tone signalling a more patient stance in policy normalisation. Ueda supports a more patient position as the central bank looks to assess the impact of the US-Japanese trade deal and the recent Japanese elections.
The BoJ upgraded its inflation forecast, leaving the door open for further interest rate hikes if needed. However, its unwillingness to pre-commit and a sign of cooling inflation could continue to undermine the yen.
The US dollar is falling across the board. The US dollar index, which measures the USD against a basket of peers, is rising 0.24% to 100.05, marking a sixth day of gains.
The US dollar is rising after the Federal Reserve’s preferred gauge for inflation showed that consumer prices continued to rise in June. Core PCE, I’m raising a 2.8% year-over-year, well above the central bank’s long-term inflation goal of 2%. The data also showed that consumers were cautious, holding back spending owing to tariff uncertainty. Weak consumption highlights the risks to economic growth at a time when inflation is rising.
The data highlights the challenges the Fed faces and comes after the central bank left interest rates unchanged this week at 4.25 to 4.5%.
Attention will now turn to tomorrow’s non-farm payroll report, which is expected to show that 110,000 jobs were added in July, down from 147,000 in June. Signs of a weakening job market may unnerve investors and pull the US dollar lower.
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