USD/JPY POSTS FRESH MULTI-DECADE HIGH ABOVE 161.00 AHEAD OF US INFLATION RELEASE

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  • USD/JPY rises above 161.00 amid firm US Dollar ahead of the US Core PCE Inflation.
  • US inflation data is expected to have softened in May.
  • Fears of Japan’s intervention have intensified as Yen weakened to 161.00 against the US Dollar.

The USD/JPY pair prints a fresh multi-decade high at 161.28, its highest since 1986, on Friday. The asset rises further as the US Dollar (USD) strengthens amid uncertainty ahead of the United States (US) core Personal Consumption Expenditure price index (PCE) data for May, which will be published on Friday.

The US underlying inflation data will provide cues about when and how much the Federal Reserve (Fed) will reduce interest rates this year. The US PCE report is expected to show that price pressures grew at a slower pace of 0.1% against 0.2% in April month-on-month. Annually, the underlying inflation is projected to decelerate to 2.6% from 2.8% in April.

A scenario in which price pressures decline expectedly or more would boost expectations of early rate cuts by the Fed. Currently, financial markets expect that the Fed will start reducing interest rates from the September meeting. The Fed is also expected to deliver two rate cuts this year against one indicated by officials in the latest dot plot.


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