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- The USD/JPY pair is losing ground to approach the 146.20 level in early Asian trading on Wednesday.
- Japan’s consumer price inflation continued to rise in July, raising expectations for another interest rate hike by the Bank of Japan.
- The Fed’s Collins said it would be appropriate soon to start cutting interest rates.
the USD/JPY The pair is trading weaker near 146.20 during the early Asian session on Friday. The Japanese Yen (JPY) rose after the release of national consumer data. Price Index CPI inflation data and Bank of Japan Governor Kazuo Ueda’s speech. Traders will be closely watching US Federal Reserve Chairman Jerome Powell’s speech at the Jackson Hole Symposium later on Friday.
Japan’s core consumer price index rose 2.8% year-on-year in July, data from the Statistics Bureau showed on Friday, compared with 2.8% in June. Meanwhile, core inflation, which excludes fresh food prices, came in at 2.7% year-on-year in the same reporting period, versus 2.6% previously. The figure was in line with market expectations and may revive the case for a rate hike by the Bank of Japan, which is boosting the yen against its rivals.
Core inflation, which excludes fresh food and energy prices, fell to 1.9% year-on-year in July from 2.2% in June, its lowest level since September 2022.
In addition, hawkish comments from Bank of Japan Governor Ueda are broadly boosting the yen. Bank of Japan Bank of Japan Governor Kazuo Ueda said on Friday that Japan’s economy is moving in line with protecting its price targets. Ueda added that the central bank expects to adjust policy if the economy moves as planned.
On the other hand, markets are expecting the Fed to begin easing policy at its September meeting. Minutes of the meeting released on Wednesday indicated that a majority of Fed members support a rate cut at the upcoming meeting next month. Investors are now pricing in a 76% chance of a 25 basis point rate cut at the September meeting, according to the CME FedWatch tool. Markets are expecting a full percentage point rate cut by the end of this year.
Boston Fed President Susan Collins said Thursday that it would be appropriate to start cutting interest rates soon, adding that incoming data would guide the pace of rate cuts. Kansas City Fed President Jeff Schmid indicated Thursday that he was looking closely at the dynamics behind the rise in the unemployment rate and would let the data guide his decision on whether to support a rate cut next month. Attention will turn to the Fed Powell’s speech Later on Friday, which could give some hints about the path of interest rates in the United States.
