US Dollar Dominates Against Yen in Wake of Strong Inflation Data

Key Takeaways:

  • 💵 Yen weakened against the dollar to its highest level since 1990
  • 📈 US inflation data showed higher than expected increases in CPI, with 0.4% monthly and 3.5% annual growth
  • 💹 Core inflation excluding food and energy components also rose more than expected, by 0.4% monthly and 3.8% annually
  • 📊 Dollar reached 152.47 yen, highest since the mid-1990s
  • 🌍 Dollar index increased by 0.7% to 104.7
  • 💲 The dollar edged down before a key US inflation report while the yen remained near multi-decade lows
  • 🔍 U.S. CPI data awaited for hints on Federal Reserve’s policy outlook
  • 📈 Possibility of a Fed rate cut in June at 50%, hold at 46%
  • 💹 Strong U.S. jobs report raises questions on Fed rate cuts this year
  • 💱 Solid inflation number could lead to a higher dollar
  • 📉 If last month’s reading below 0.3%, reassessment of U.S. inflation trend could weaken the dollar
  • 🇯🇵 Japanese yen near 34-year low, Bank of Japan Governor dismisses speculation on raising interest rates
  • 🌏 Fitch cuts China’s sovereign credit rating outlook to negative
  • 💼 ECB meeting approaching, kiwi and euro remain steady
  • 📊 Offshore yuan steadied as traders wait on China inflation and trade data


The foreign exchange market saw significant movements recently, particularly between the yen and the dollar. The yen weakened against the dollar, reaching its highest level since 1990. This was influenced by US inflation data, which showed higher than expected increases in CPI, leading to a rise in the dollar index as well. Core inflation, excluding food and energy components, also exceeded expectations, affecting the market dynamics.

Traders are closely monitoring US CPI data for hints on the Federal Reserve’s policy outlook. There is a possibility of a Fed rate cut in June, although strong U.S. jobs report has raised questions about potential rate cuts this year. A solid inflation number could further strengthen the dollar, while a lower reading may weaken it.

In other regions, the Japanese yen is near a 34-year low, with the Bank of Japan Governor dismissing speculation on raising interest rates. Fitch has cut China’s sovereign credit rating outlook to negative, adding to the global market uncertainties. With the ECB meeting approaching, the kiwi and euro currencies remain steady as traders keep an eye on developments.

The offshore yuan has steadied as traders await China’s inflation and trade data to further assess market trends. Custom trading scripts and ideas shared by users are also contributing to the market analysis, along with top-rated mobile reviews for fintech apps.

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