The US Dollar (USD) stages a recovery against the Japanese Yen (JPY) in the mid-North American session, reclaiming the 149.00 figure after dipping towards the 148.52 daily low during the Asian and European session. Nevertheless, bounced off the lows and hovers at around 149.40s, gaining 0.12%. Data revealed from the United States (US) showed inflation is cooling, as August´s Core Personal Consumption Expenditures (PCE), the US Federal Reserve (Fed) preferred gauge for inflation, expanded by 3.9% YoY, below estimates of 4%. At the same time, headline inflation grew by 3.5% YoY as expected, above July’s 3.4%. Even though the latest Fed officials had stressed that further tightening is needed, other policymakers are taking a cautious approach. Meanwhile, expectations for a rate hike in November lowered as shown by the CME FedWatch Tool,
Other data revealed the University of Michigan (UoM) showed that Consumer Sentiment for September’s final reading deteriorated, while inflation expectations ticked up to 3.2% from 3.1% for one year. Americans see inflation at 2.8% on a five-year horizon, up from 2.7%. On the Japanese front, intervention threats in the Forex markets continued, though contradicting what Japanese authorities said regarding that moves should be justified by fundamentals. Consequently, the dovish stance of the Bank of Japan (BoJ) suggests further JPY weakness is justified. This week, BoJ Governor Kazuo Ueda cited that discussing an exit from the ultra-loose monetary policy would be premature as inflation above 2% is not governed by wage growth. On Thursday, Japanese Finance Minister Shunichi Suzuki reiterated that he won’t rule out any steps to respond if there’s excessive FX volatility. He added that authority is closely watching FX’s moves with a sense of urgency. Given the fundamental backdrop, the USD/JPY could test the 150.00 mark, but intervention threats, might refrain buyers from opening fresh long positions.