Key Takeaways:
- 💹 The dollar hit a 34-year high against the yen, reaching the highest level since June 1990
- 📈 The dollar was set for a 2% weekly gain against the Japanese currency, the largest since mid-January
- 💰 On the US side, inflation data showed monthly and yearly increases in the personal consumption expenditures (PCE) price index
- 📉 U.S. rate futures have priced in a 58% chance of a Fed cut at the September meeting, down from 68% a week ago
- 🌍 In Japan, the BOJ left interest rates steady and made small adjustments to its inflation forecast, indicating small policy moves in the future
- 🗓️ Investors are now focused on the upcoming Federal Open Market Committee (FOMC) to gauge potential rate hike policies
The Currency Market’s Recent Developments
The currency market has seen significant movements recently, with the dollar reaching a 34-year high against the yen, marking the highest level since June 1990. This was accompanied by a 2% weekly gain against the Japanese currency, the largest increase since mid-January. On the U.S. side, inflation data showed upward trends in the personal consumption expenditures (PCE) price index, reflecting potential economic growth. Despite this, U.S. rate futures have signaled a decreased probability of a Fed cut at the upcoming September meeting, down to 58% from 68% last week. Meanwhile, in Japan, the Bank of Japan (BOJ) opted to keep interest rates unchanged and made slight modifications to its inflation forecast, hinting at potentially minor policy adjustments in the future. With the focus now turning to the Federal Open Market Committee (FOMC), investors are eagerly awaiting insights into possible rate hike policies in the market.