Hotter-than-expected US inflation data reinforces Fed rate-hike bets, pressuring the Japanese Yen to its weakest level since mid-May.
The Japanese Yen fell to a six-week low of 160.55 against the US Dollar in early Asian trading Thursday, extending losses after a stronger-than-expected US inflation report. The data bolstered expectations that the Federal Reserve will maintain higher interest rates for longer, widening the yield gap with Japan’s ultra-low rates.
Prior to the release, USD/JPY had traded near 159.80, with the pair last touching 160.50 in mid-May. Analysts had anticipated a softer inflation print, which could have eased Fed tightening bets. Instead, the upside surprise sent the Yen to fresh lows.
Markets are now pricing in a higher probability of Fed rate cuts being delayed, while Japanese authorities remain on alert for potential currency intervention.