Weaker-than-expected US producer inflation data fuels expectations the Federal Reserve may hold rates steady in September.
The USD/JPY pair fell to near 159.45 in Asian trading Friday after US Producer Price Index data showed no growth in July, easing pressure on the Federal Reserve to raise rates. The flat PPI reading followed a revised 0.1% decline in June and missed forecasts of a 0.2% increase.
Core PPI, excluding food and energy, rose 0.2% month-over-month, below the 0.3% consensus. Year-over-year, headline PPI climbed 4.7%, while core PPI increased 4.2%. Traders now see a higher chance of a Fed rate hike in October or December rather than September.
Market focus shifts to upcoming US July Retail Sales data, which could further influence Fed policy expectations. Meanwhile, speculation grows that the Bank of Japan may raise rates in September or October to counter yen weakness.