Japanese Yen advances as US PCE shifts Fed rate hike bets toward December
USD/JPY falls 0.30% on Wednesday and trades around 156.80 at the time of writing, as the US Dollar (USD) comes under selling pressure following softer-than-expected United States (US) inflation data.
The Japanese Yen experienced a slight gain on Wednesday, with the USD/JPY currency pair falling 0.30% and trading around 156.80. This move came as the US Dollar (USD) faced selling pressure due to disappointing US inflation data. The US Personal Consumption Expenditures (PCE) Price Index showed that annual headline inflation remained steady at 3.4% in August, below the anticipated 3.7%.
The core PCE Price Index, which excludes volatile food and energy components, remained unchanged at 3% YoY, also lower than the market's expectations. These softer inflation figures prompted a reassessment of the timing of potential further interest rate hikes by the Federal Reserve (Fed). According to the CME FedWatch tool, the probability of a rate increase in October dropped to around 35%, from nearly 51% earlier and 71% a week ago.
This shift in expectations weakened the US Dollar and added downward pressure on the USD/JPY exchange rate. While markets do not abandon their expectations for additional monetary tightening, they are now leaning toward a later timing, with the chance of a rate hike in December rising to nearly 60%.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
