PCE and Tokyo CPI Releases Set to Spark Rate Hike Bets
The upcoming US PCE and Tokyo CPI releases will be crucial for investors in the coming days. The PCE index is closely watched by central banks, and a surprise reading could impact expectations of a rate hike before year-end. A steady 3.3% y/y headline reading is expected for July's PCE release, but a stronger-than-expected result could boost bets on a rate hike, benefiting the USD/JPY pair.
The Bank of Japan's Tokyo CPI release on Friday will also be closely watched, with expectations pointing to a cooling to 1.7% y/y from 1.9%. A strong reading would bolster the case for a September BoJ rate hike, pushing the USD/JPY pair down to test the pivotal 157.00-157.90 support zone.
Meanwhile, market attention will shift to the Jackson Hole Symposium on Thursday, where Fed Chairman Kevin Warsh is expected to speak on Friday. Warsh's speech may provide insight into the Fed's thinking on inflation and monetary policy, although he is likely to avoid explicit policy commitments.