USD/JPY falls to 158.85 as Fed rate hike odds drop to 30% for September, while BoJ rate hike expectations grow.
The Japanese Yen strengthened against the US Dollar on Friday, with USD/JPY dropping 0.40% to 158.85. The decline follows softer US economic data, including a 0.6% drop in July Retail Sales and easing inflation pressures, reducing Fed rate hike expectations.
The US Dollar Index fell 0.47% to 99.50 as traders now see only a 30% chance of a September Fed rate hike, down from over 50% a week ago. Weak Nonfarm Payrolls and CPI data further dampened expectations for near-term tightening.
Meanwhile, the Bank of Japan’s hawkish outlook supported the Yen, with markets pricing in a potential rate hike next month. The shift in monetary policy expectations drove the currency pair lower.