The yen strengthened on Wednesday, pushing USD/JPY down 0.1% to near 159.00, as markets leaned towards a Bank of Japan rate increase of 25 basis points to 1.25% at the September meeting. A Reuters survey taken on 17-24 August found 57% of economists expecting that move, compared with 5% in a July poll, while the focus has shifted to how the BoJ frames the policy path beyond the 18 September decision.
US Dollar Movement And Inflation Data
The dollar softened ahead of the US July Personal Consumption Expenditure Price Index release at 12:30 GMT. Based on recent CPI and PPI readings, Wells Fargo forecasts a 0.1% monthly rise in the PCE deflator, taking the year-on-year rate to 3.6%, and sees core PCE inflation up 0.2% on the month with the annual rate at 3.3%. In technical terms, USD/JPY was at 159.08, constrained below the 20-day EMA at 159.46, with the RSI around 44 indicating mildly negative momentum.
