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US Dollar Index falls as traders speculate on Japanese intervention

USD/JPY slid nearly 480 pips to trade below 160, while weaker US growth and softer core PCE inflation reduced the odds of an September rate hike.

Reported · Written up by our desk · Major Pairs

The US Dollar Index, which tracks the dollar against a basket of six major currencies, fell on Thursday as a sharp rise in the Japanese yen (JPY) prompted speculation that Japanese authorities may have intervened. USD/JPY dropped nearly 480 pips, sliding below the psychological 160 level, while the DXY was around 100 after hitting 99.87, its lowest level since June 17, according to FXStreet.

FXStreet also linked the broader greenback weakness to slower US growth. The US economy expanded at an annualized pace of 1.5% in the second quarter, below a 2.1% forecast and down from 2.1% in the first quarter, citing data from the US Bureau of Economic Analysis.

Recent inflation and spending signals provided limited support for the dollar as well. The core personal consumption expenditures price index rose 0.1% in June versus 0.3% in May, with the annual rate slipping to 3.3% from 3.4%. Personal income growth slowed to 0.2%, and personal spending eased to 0.3%, per FXStreet.

After the data, traders trimmed expectations for a September rate increase. FXStreet said the CME FedWatch Tool showed about a 55% probability of a 25-basis-point hike, down from roughly 60% prior to the release, following the Federal Reserve decision to hold interest rates at 3.50% to 3.75%. It also noted that inflation risks may still be elevated because the war in the Middle East is keeping a geopolitical premium in oil prices.

Latest closeUSD/JPY 163.42 ▼0.2%|Dollar index 100.80 ▼0.6%

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