- USD/JPY edges lower to around 162.15 in Thursday’s Asian session.
- Japan’s Katayama said ready to take appropriate action on currency anytime as needed.
- Cooling US inflation curbs Fed rate hike bets.
The USD/JPY pair loses ground to near 162.15 during the Asian trading hours on Thursday. The Japanese Yen (JPY) strengthens against the US Dollar (USD) after verbal intervention from Japanese authorities. Traders await the release of the US June Retail Sales data later on Thursday for fresh impetus.
Traders remain on alert for possible intervention from Japanese officials. On Thursday, Japan’s Finance Minister Satsuki Katayama said that the authorities are ready to take appropriate action on currency anytime as needed. She added that the officials will track market trends and economic data to ensure fiscal sustainability.
Softer-than-expected US inflation data reinforced bets that the US Federal Reserve (Fed) can stay patient on interest rate hikes, weighing on the Greenback. Data released by the US Bureau of Labor Statistics (BLS) on Wednesday showed that the US Producer Price Index (PPI) rose by 5.5% YoY in June, versus 6.0% in May (revised from 6.5%). This reading came in below the market consensus of 6.2%.
On a monthly basis, the PPI declined by 0.3%, compared to the 0.6% increase recorded in May (revised from 1.1%) and improved compared with the estimate for no change.
The probability for a rate hike in July was slashed to 9.6%, versus a 45% implied probability at the start of the week. Markets still see even odds of at least a 25 basis points (bps) increase in September, according to the CME FedWatch tool.
