- The Japanese Yen (JPY) falls after gains yesterday
- BoJ rate outlook is assessed
- The US Dollar (USD) falls against its major peers
- US CPI rose to 2.7% YoY
The US dollar Japanese yen (USD/JPY) exchange rate is falling, giving back yesterday’s gains. The pair rose 0.33% in the previous session, settling on Monday at 148.15. At 21:30 UTC, USD/JPY is trading -0.23% higher at 147.84 and trades in a range of 147.58 to 148.52.
The yen is gaining modestly but trades within a familiar range for around a week as investors continue to assess the outlook for the Bank of Japan’s monetary policy.
Minutes from the BoJ ‘s July meeting showed that policymakers maintained the view that further rate hikes remain appropriate despite increased uncertainty surrounding US trade tariffs.
The minutes also suggest that Japanese economic growth is expected to moderate and that improvement in underlying inflation will likely be temporarily slow.
Looking ahead, attention will be on Japanese GDP and PPI data later in the week.
The US dollar is falling across the board. The US dollar index, which measures the USD against a basket of peers, is falling -0.46% to 98.06, giving back yesterday’s gains.
The US dollar is falling across the board after US inflation increased marginally in July, although not by enough to deter the Federal Reserve from a September rate cut.
The data showed that the consumer price index increased 0.2% month on month in July and 2.7% annually, less than the -2.8% forecast. Meanwhile, core inflation, which excludes food and energy prices, rose 0.3% month on month and 3.1% annually.
The data showed that tariff-related sectors saw an increase in price pressure, while the disinflationary trend in services also seemed to be stalling. The data will likely be enough for the Federal Reserve to cut interest rates by 25 basis points in September, although another rate cut quickly after is looking less likely. With inflation now 53 months above the Fed’s 2% target, policy makers could struggle to cut rates consecutively, even if the jobs market looks weaker