Ella 
The yen gave up recent gains against the dollar following the release of Tokyo Consumer Price Index (CPI) data on Friday. Rising inflation in Tokyo reinforces the Bank of Japan’s (BoJ) hawkish monetary policy stance, supporting the Japanese yen and putting downward pressure on the USD/JPY pair.
In August, the Tokyo Consumer Price Index (CPI) increased by 2.6% year-on-year, higher than the 2.2% increase in July. Core CPI also rose to 1.6% year-on-year in August from the previous 1.5%. In addition, Japan’s unemployment rate unexpectedly climbed to 2.7% in July, which was higher than market expectations and June’s 2.5%, setting the highest unemployment rate since August 2023.
The downside for USD/JPY may be limited as the greenback maintained its recent gains following stronger-than-expected economic data on Thursday. However, dovish comments from the Fed may limit further gains for the dollar.
Investors are awaiting the release of the U.S. personal consumption expenditures (PCE) price index for July, scheduled for later in the North American market, for clues on the future direction of U.S. interest rates.
