Ella 
USD/JPY held near 159.10 after rebounding from a near three-week low of 157.41 in early Asian trading hours on Friday. The upside for the pair may be limited due to concerns about further intervention in the foreign exchange market by Japanese officials. Traders will focus on the U.S. Producer Price Index (PPI) for June and the preliminary Michigan Consumer Sentiment Index for July, both due later on Friday.
The lowest Consumer Price Index (CPI) reading in more than three years has raised the possibility of a rate cut from the Federal Reserve (Fed) starting in September. The U.S. CPI inflation rate for June came in below expectations, with the annualized headline CPI inflation rate slowing to 3.0% from 3.3% previously. Meanwhile, the monthly CPI inflation rate fell 0.1% month-on-month in June from a flat 0.0% in the previous month, below the consensus estimate of 0.1%.
Fed Chairman Powell acknowledged progress on price pressures, but he was not ready to make an announcement. However, Powell added that “more good data” would open the door to rate cuts. Financial markets see a nearly 85% chance of a Fed rate cut in September, up from 70% before the CPI report. Two rate cuts are expected this year.
The Japanese yen (JPY) gained traction in the previous session amid speculation that Japanese authorities could intervene in the foreign exchange market to support its currency. Earlier on Friday, Japan’s top currency diplomat Masato Kanda said the yen has moved a little too fast recently and that he would take appropriate steps in the foreign exchange market if necessary. Potential further intervention by Japanese officials could support the yen and act as resistance for USD/JPY for the time being.
