Investing.com– The dollar stabilized against a basket of currencies on Friday after weaker-than-expected inflation data pushed the U.S. currency to a one-month low amid heightened concerns that the Federal Reserve will cut interest rates in September.
Broader currency markets were a bit cautious amid volatility in the Japanese yen. The Japanese currency strengthened sharply slow Thursday, prompting speculation about whether the Japanese government was intervening in currency markets.
The euro was little changed against the dollar. German inflation data came in slightly weaker than expected in June. The pair stabilised after rising to a more than one-month high against the dollar on Thursday.
The British pound was also flat, with the pair little changed after hitting a near one-year high against the dollar on Thursday. The pound was also lifted by data on Thursday that showed the British in May.
Dollar near one-month low as low CPI boosts rate cut bets
The rate stabilised on Friday after falling to a one-month low in overnight trading.
The dollar was hit challenging by weaker-than-expected data that showed inflation fell slightly more than expected in June.
The reading increased concerns that the Federal Reserve will become more confident to start cutting interest rates.
According to , traders were pricing in an 83.4% probability of a Fed rate cut in September, up from a 64.7% probability recorded the previous week.
Japanese Yen Volatile as USDJPY Falls from 161; Intervention in Focus
The Japanese yen was highly volatile in Friday’s session, with the pair rising 0.2% to around 159.18 yen.
The gauge fell more than 2% on Thursday after a tender U.S. CPI report, falling from levels near a 38-year high reached in early July.
But the yen’s plunge has raised questions about whether the Japanese government is actively intervening in currency markets. Officials have given scant guidance on the matter, even after a series of warnings in recent weeks against aggressive betting against the yen.
Bank of Japan balance sheet data due in slow July is expected to provide more clarity on whether the government actually intervened. Traders also speculated whether compact positions in the yen were being capped by the dollar’s ​​edged decline following a tender June CPI reading.
