Japanese Yen strengthens as US inflation fails to sustain Dollar rebound
USD/JPY falls 0.54% on Friday and trades around 153.60 at the time of writing.
On Friday, the USD/JPY currency pair experienced a decline of 0.54%, settling near 153.60. Initially, the pair soared to 154.49 following the release of U.S. inflation data. However, the strength of the Japanese Yen quickly subdued the initial rebound in the U.S. Dollar. The U.S. Consumer Price Index (CPI) rose by 3.4% year-over-year in August, matching market expectations.
On a monthly basis, prices increased by 0.4%, matching the previous month's rise. Core CPI, which excludes volatile food and energy prices, grew by 0.3% on a monthly basis, surpassing the 0.2% forecast. Nevertheless, annual core inflation eased to 2.4% from 2.5% in July. The U.S. Dollar initially strengthened as the stronger-than-expected monthly increase in core inflation was reported.
However, this reaction was swiftly overcome by the Japanese Yen, which is among the strongest currencies this week. The Japanese currency benefits from expectations surrounding the Bank of Japan's upcoming monetary policy decision. Market participants anticipate the central bank to maintain its monetary normalization path, with a potential 25-basis-point rate hike to 1.25% at next week's meeting.
This anticipation, combined with the fading momentum of the U.S. Dollar following the initial CPI reaction, supports the Japanese Yen and keeps USD/JPY pressured around 153.60.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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