Yen edges up as traders push back Fed rate hike bets

The Japanese yen saw a slight increase against the US dollar, edging up by 0.2% to 159.055 yen, as traders dismissed forecasts of a Federal Reserve rate hike this year. Despite Japanese GDP for the second quarter expanding at an annualized rate of 1.1%, sources noted that the findings were inconsistent. While government consumption signals the impact of expansionary fiscal policies, energy price pass-through remains limited.

Meanwhile, the euro and British pound remained steady, while the Australian and New Zealand dollars held constant. US economic indicators, such as non-farm payrolls and inflation measures, have reduced expectations of Fed rate hikes until the upcoming Jackson Hole symposium in August. Fed funds futures suggest a 66.9% probability of the Fed maintaining rates at their September meeting, up from 47.6% a month ago.

The US dollar index, which gauges the dollar's strength against six currencies, dipped slightly, trading near its lowest level of the month. Meanwhile, oil prices were volatile, and US-Iran talks to resolve the Middle East conflict remained inconclusive.