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Japanese Yen pares gains against US Dollar as markets digest US CPI

  • Japanese Yen struggles to hold gains against the US Dollar following in-line US CPI data.
  • Traders trim September Fed rate-hike bets, but elevated Oil prices keep inflation concerns alive.
  • USD/JPY approaches 160, where the risk of another intervention could keep buyers cautious.

The Japanese Yen trims its gains against the US Dollar (USD) on Wednesday as in-line US CPI data fails to trigger a significant move. At the time of writing, USD/JPY trades around 159.20 after touching an intraday low of 158.58.

The headline Consumer Price Index (CPI) rose 0.1% in July, reversing June’s 0.4% decline. On a yearly basis, inflation eased to 3.4% from 3.5%. Core CPI increased 0.2% MoM after staying flat in June, with the annual rate slowing to 2.5% from 2.6%.

Following the release, traders further reduced Federal Reserve (Fed) rate-hike bets, which had already weakened after the softer-than-expected July Nonfarm Payrolls (NFP) data. According to the CME FedWatch Tool, the probability of a September hike now stands at 38%, down from 44% before the CPI report.

US Treasury yields edge lower across the curve, while the US Dollar recovers from its post-CPI decline. The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, trades around 99.82, bouncing off an intraday low of 99.61.

The US Dollar stays supported within its recent range. The CPI report lowered the chances of a September rate hike but did little to change the wider picture. Inflation is still too high, while elevated Oil prices could make it more difficult for the Fed to bring inflation back to its 2% target.

At the same time, limited prospects for peace in the Middle East lend some support to the Greenback. Reuters reported, citing a senior Iranian source, that there are no discussions between Iran and the US over extending the ceasefire.

On the Yen side, the Japanese currency has already given up nearly half of the gains triggered by the recent joint US-Japan intervention. Officials from both countries have indicated that they are prepared to act again if needed, which could discourage traders from aggressively pushing USD/JPY back above the 160 psychological mark.

Attention now shifts to Producer Price Index (PPI) data from both Japan and the US, due on Thursday.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the New Zealand Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.00%-0.01%-0.05%-0.04%-0.18%0.18%0.07%
EUR0.00%-0.00%-0.06%-0.03%-0.22%0.20%0.08%
GBP0.00%0.00%-0.06%-0.04%-0.19%0.19%0.08%
JPY0.05%0.06%0.06%0.01%-0.14%0.22%0.13%
CAD0.04%0.03%0.04%-0.01%-0.16%0.23%0.11%
AUD0.18%0.22%0.19%0.14%0.16%0.39%0.29%
NZD-0.18%-0.20%-0.19%-0.22%-0.23%-0.39%-0.10%
CHF-0.07%-0.08%-0.08%-0.13%-0.11%-0.29%0.10%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Author

Vishal Chaturvedi

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.

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