Yen dips against dollar ahead of US inflation data

The yen weakened against the dollar on Monday in a more stable currency market following last week’s volatility. Investors are assessing the likelihood of a significant Fed rate cut next month amid upcoming US economic data.

Last week was turbulent, starting with a sharp sell-off in currencies and stocks due to concerns about the US economy and the Bank of Japan’s (BOJ) stance.

The week ended on a calmer note, with Thursday’s robust US jobs data prompting a reduction in expectations for Fed rate cuts this year.

“If global investor risk sentiment continues to improve in the week ahead, it is likely that market expectations for Fed rate cuts will continue to be scaled back,” currency analysts at MUFG said in a note.

Investors are currently anticipating a 100-basis point cut by the Fed by year-end, as indicated by the CME Group’s FedWatch tool.

The dollar was trading at 147.55 yen, up 0.7 per cent, and also up nearly 0.5 per cent against the Swiss franc at 0.8694.

Attribution: Reuters