Key Facts
• On July 15, the yen weakened to 149 per dollar, a 3-month low.
• U.S. inflation accelerated for the second consecutive month, with June CPI up 2.7% YoY.
• The yen depreciated by over 1 yen against the dollar compared to the previous day.
• The widening U.S.-Japan interest rate gap drove demand for the dollar over the yen.
• The Federal Reserve’s early rate cut expectations diminished due to rising inflation.
Summary
The yen weakened to 149 per dollar on July 15, marking its lowest level in three months. This decline was driven by accelerating U.S. inflation, with the June Consumer Price Index (CPI) rising 2.7% year-on-year, marking the second consecutive month of inflation growth. The widening interest rate gap between the U.S. and Japan prompted investors to favor the higher-yielding dollar over the yen, leading to a depreciation of over 1 yen compared to the previous day. Additionally, expectations for an early rate cut by the Federal Reserve diminished as inflation concerns persisted.
