Yen Weakens Ahead of US Inflation Report

12 Aug 2024 , 10:06 AM

The yen was slightly weaker against the dollar in trade thinned by a Japanese holiday on Monday, with market players remaining unsure about the likelihood of a significant Fed rate cut next month.

The respite comes after a rocky week that started with a big selloff in currencies and stock markets, fuelled by concerns about the US economy and the Bank of Japan’s hawkishness.

Last week ended calmer, with Thursday’s stronger-than-expected US jobs data prompting markets to reduce expectations on Federal Reserve interest rate cuts this year.

Still, investors are sceptical that the Fed can afford to be patient with rate cuts, and their forecast of 100 basis points of easing by year end, according to the CME Group’s FedWatch opens new tab tool, corresponds to a recession scenario.

That makes markets extremely vulnerable to data and events, particularly the U.S. producer and consumer price data due on Tuesday and Wednesday of this week, the global central bankers’ meeting in Jackson Hole next week, and even earnings from artificial intelligence darling Nvidia later in the month.

The dollar was trading at 146.87 yen, up 0.2% from late U.S. prices on Friday. The euro traded at $1.0918, and the dollar index was unchanged at 103.18.

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