USD Gains Strength on Strong US Economic Data
The Japanese Yen has come under pressure as the US Dollar gained strength following the release of US economic data. The USD/JPY pair advanced 0.40% on Thursday, with the US Dollar rebounding after the producer price index rose 5.4% year-over-year in August, exceeding expectations.
The acceleration in producer prices, along with a decline in Initial Jobless Claims to 206K, has strengthened expectations of a Federal Reserve interest-rate hike in September. The CME FedWatch tool now prices in nearly a 70% chance of a rate increase, up from around 61% before the data were released.
Meanwhile, the Japanese Yen's recent rebound, fueled by hawkish expectations surrounding the Bank of Japan, has paused. Markets fully price in a 25-basis-point rate hike at the September meeting, which may limit the extent of the USD/JPY advance.