July PPI came in below market expectations, weakening expectations for a US rate hike in September. USD/JPY was stuck around the mid-¥159s, while concerns over coordinated US-Japan intervention remained a factor.
In markets on the 14th, the US producer price index (PPI) for July was flat month on month and rose 4.7% year on year, below expectations, further weakening expectations for a September rate hike by the Federal Reserve. USD/JPY was stuck around the mid-¥159s, as dip-buying and concerns over intervention remained competing forces.
In Tokyo trading, USD/JPY was around ¥159.43 at 9:00 a.m. After falling to around ¥159 the previous day, it rose to the ¥159.50 range toward the end of the session. Following the July PPI data, the market lacked a clear direction.
The probability of a September rate hike implied by interest-rate futures fell to 35%. While expectations that the Fed will hold off on a rate hike strengthened, factors supporting the dollar remained, including risks related to the situation in the Middle East. Oil prices fell, and developments in the oil market also affected risk appetite.
The South Korean won held in the ¥1,410 range. Market movements in New York, NDF levels and oil prices were factors. The market's focus has shifted to US inflation data for August and BOJ policy developments. A range-bound market centered on ¥159 is expected ahead.