The Japanese Yen has appreciated dramatically in the aftermath of US CPI coming in softer than anticipated. It gained around 1.6% against the US Dollar in the North American session, with USD/JPY trading as low as 134.03 at one stage. The US Dollar is weaker against every major currency. For the record, the headline US CPI printed at 8.5% year-on-year to the end of July instead of the 8.7% forecast and 9.1% previously. Core US CPI was the same as the prior month at 5.9%, but lower than the 6.1% anticipated. US yields initially dipped across the curve on the news but then retraced most of the slide after Fed speakers hosed down hopes of rate cuts next year. Federal Reserve Bank of Minneapolis president Neel Kashkari ruminated that he would like to see the Fed funds rate at 3.9% by the end of this year and at 4.4% by the end of 2023. He also said that the soft inflation data doesn’t change the Fed’s rate path. Since he joined the Federal Open Market Committee (FOMC) in 2015, Kashkari leaned toward a dovish stance. At the outbreak of the pandemic, he became more flexible, making his hawkish views particularly noteworthy.
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