Japanese core inflation rises to 1.8% YoY in July, fueling bets for a Bank of Japan rate increase amid a weaker USD.
The USD/JPY pair fell to around 158.60, extending losses as the Japanese Yen strengthened on hawkish Bank of Japan expectations. Core CPI accelerated to 1.8% YoY in July, the fastest pace since January, up from 1.6% in June.
A closely watched inflation gauge, excluding fresh food and fuel, rose 1.9% YoY, reinforcing expectations for a potential BoJ rate hike. Meanwhile, the USD Index hovered near a three-month low as traders scaled back Fed rate hike bets, though a 68% chance of a year-end increase remains.
Markets reacted to the inflation data and USD weakness, pushing the pair toward its first weekly loss in three weeks.