Hotter-than-expected US inflation data reinforces Fed rate-hike bets, pressuring the Japanese Yen to its weakest level in six weeks.
The Japanese Yen fell to a six-week low against the US Dollar, with USD/JPY rising to 160.55 in early Asian trading. The move follows a stronger-than-anticipated US inflation report, which bolstered expectations that the Federal Reserve will maintain higher interest rates for longer.
Prior to the report, USD/JPY had stabilized near 158.00, but the inflation data triggered a sharp repricing of Fed policy bets. The pair last traded at these levels in mid-May, before suspected Japanese intervention briefly curbed its advance.
Markets are now pricing in a reduced likelihood of Fed rate cuts this year, while the Bank of Japan’s ultra-loose policy stance continues to weigh on the Yen.