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Soft US PPI cools Fed bets, USD/JPY slips near 159.45

With July PPI unchanged and core PPI up 0.2% month over month, traders are shifting odds toward Fed action later rather than next month.

Reported · Written up by our desk · Major Pairs

USD/JPY lost traction around 159.45 in Asian trading as softer US inflation data tempered expectations for near-term Fed tightening, FXStreet reported. The pullback reflected both cooling inflation prints and concerns around potential currency intervention that could weigh on the US dollar versus the yen.

The Bureau of Labor Statistics said the US Producer Price Index was unchanged in July, following a revised 0.1% decline in June. Core PPI, excluding food and energy, rose 0.2% month over month in July versus 0.3% expected, while headline PPI increased 4.7% year over year and core PPI climbed 4.2% year over year.

Market pricing has shifted, with traders moving away from a September Fed move and instead leaning toward a rate hike in October or December. The report also noted the Bank of Japan is likely to raise rates in September or October, citing concerns about yen weakness feeding into prices and the desire to strengthen the effect of a recent US-Japan currency intervention.

Analysts cited by FXStreet warned that the link between BoJ tightening and yen strength may be overstated, pointing to a sharp narrowing in US-Japan 2-year rate differentials since 2025 despite USD/JPY moving higher. Technically, the pair was described as bearish while trading below its 100-day moving average, with resistance cited in the 160.00 to 160.50 zone.

Latest closeUSD/JPY 159.49 ▲0.1%

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