Ella 
USD/JPY broke a two-day losing streak and was trading around 142.90 during the European session on Thursday. The Japanese yen (JPY) remained weak following a speech by Bank of Japan (BoJ) Governor Naoki Tamura.
Bank of Japan board member Naoki Tamura said, “There is no preset idea on the pace of further interest rate increases. Exactly when Japan’s short-term interest rates may reach 1% will depend on economic and price conditions at that time.”
The USD/JPY exchange rate’s gains may be due to growing expectations for a smaller interest rate cut by the Federal Reserve in September. U.S. consumer price index (CPI) data for August showed headline inflation fell to a three-year low. This situation increases the possibility that the Federal Reserve (Fed) will begin an easing cycle and cut interest rates by 25 basis points in September.
The annual growth rate of the U.S. consumer price index fell to 2.5% in August from the previous value of 2.9%. The index missed expectations by 2.6%. At the same time, the overall CPI increased by 0.2% month-on-month. Core CPI excluding food and energy remained unchanged, rising 3.2% year-on-year. On a monthly basis, core CPI rose to 0.3% from the previous reading of 0.2%.
Markets fully expect the Fed to cut interest rates by at least 25 basis points at its September meeting, according to the CME FedWatch tool. The probability of a 50 basis point rate cut fell sharply to 15.0% from 44.0% a week ago.
