Investing.com — The dollar held steady against a basket of currencies on Friday after softer-than-expected inflation data saw the greenback sink to a one-month low amid increased expectations that the Federal Reserve will cut interest rates in September.
The broader currency markets were somewhat cautious due to the volatility of the Japanese yen. Japan’s currency strengthened sharply late Thursday, prompting speculation about whether the Japanese government had intervened in currency markets.
The euro moved little against the dollar. German inflation figures are slightly weaker than expected for June. The pair held steady after rising to a more than one-month high against the dollar on Thursday.
The British pound was also flat, with the pair moving little after recovering to a near one-year high against the dollar on Thursday. The pound was also supported on Thursday by data shown by the British in May.
Dollar almost 1 month low, as soft CPI stimulates interest rate cuts
The and stabilized on Friday after falling to a one-month low in overnight trading.
The dollar was hit by softer-than-expected data, which showed inflation cooled slightly more than expected in June.
The figures increased expectations that the Federal Reserve will have more confidence in lowering interest rates.
Traders saw according to .
Japanese Yen Volatile After USDJPY Dropped from 161; intervention central
The Japanese yen was volatile in Friday trading, with the pair rising 0.2% to around 159.18 yen.
The pair fell more than 2% on Thursday after the soft US CPI report, falling from levels near the 38-year high it reached earlier in July.
But the yen’s sharp decline raised questions about whether the Japanese government was actively intervening in the currency markets. Officials gave little guidance on the matter, even after issuing a series of warnings about aggressive bets on the yen in recent weeks.
Data on the Bank of Japan’s balance sheet, due later in July, is expected to provide further clarity on whether the government has intervened. Traders also speculated whether short positions on the yen were under pressure from a sharp decline in the dollar following weak CPI readings for June.
