Markets focus on today’s US Core CPI report, expected at 0.2% M/M, to gauge Fed rate hike odds for September.
The US dollar regained ground after a softer-than-expected nonfarm payrolls report, with September rate hike probabilities climbing back to 50%. A drop in government jobs skewed the data, while the unemployment rate fell to 4.1%, signaling underlying labor market strength.
Today’s US Core CPI report, forecast at 0.2% month-over-month, will be pivotal for the Fed’s September decision. A stronger-than-expected print could fuel rate hike bets, while a soft or in-line reading may ease tightening fears and weigh on the dollar.
On the yen side, expectations for a Bank of Japan rate hike in September persist, supported by remarks from US Treasury Secretary Janet Yellen. Japanese officials hinted at coordination with the BoJ following recent currency interventions.