- The Japanese Yen (JPY) rose sharply on Friday
- Japanese CPI supports rate hike bets
- The US Dollar (USD) fell versus its major peers
- Powell signaled towards a September rate cut
The US dollar Japanese yen (USD/JPY) exchange rate fell sharply on Friday. The pair rose 0.71% in the previous session, settling on Thursday at 148.38. On Friday at 21:30 UTC, USD/JPY closed -0.96% lower at 146.95 and traded in a range of 146.57 to 148.79. The pair fell 0.18% across the week.
Yen rose against the US dollar on Friday; however, this was largely a reaction to U.S. dollar weakness, which highlighted the central bank divergence between the Fed and the BoJ.
Data showed Japanese inflation was 3.1% year-on-year in July, down slightly from 3.3% in June but ahead of the 3% forecast. Meanwhile, cool CPI, which excludes more volatile items such as food and fuel, was also it is to 3.1%.
The data is keeping alive market expectations for another interest rate hike in the coming months. Prices continue to support the case for the BOJ to lift rates potentially as soon as October, as inflation remains above the BoJ’s 2% target.
The US dollar fell sharply versus its major peers. The US dollar index, which measures the USD against a basket of peers, fell -0.92% on Friday. The USD fell 0.14% across the week, marking the third straight weekly decline.
The US dollar fell sharply on Friday after Federal Reserve chair Jerome Powell paved the way for the Federal Reserve to cut interest rates in the September meeting. Powell noted that a softening in the US labour market could offset risks that Donald Trump’s tariffs will worsen inflation.
Powell’s remarks at the Jackson Hole Symposium on Friday suggest that he could support a 25 basis point rate cut at the central bank’s meeting in September.
His speech came at a pivotal time for the Fed as President Trump and his allies launched A fierce campaign against Powell and other officials, insisting that the Fed should be cutting interest rates more aggressively.
