Yen exchange rate today
According to Lao Dong, on June 27, the Japanese Yen (JPY) increased slightly in the last session of the week, remaining near a one-and-a-half-week high against the USD, thanks to buying momentum as prices decreased and the pessimistic sentiment around the greenback.
Previously, CPI data for Tokyo and Japanese retail was not very positive but was quickly overlooked by the market, as expectations of the Bank of Japan (BoJ) continuing to raise interest rates in the context of domestic inflation remaining higher than the 2% target.
Yen slightly appreciates as USD decreases
According to FXStreet, Tokyo's CPI in June increased by 3.1% over the same period, down slightly from the previous 3.4%, while the core CPI (excluding fresh food) decreased from 3.6% to 3.1%. Retail sales in May decreased by 0.2% compared to the previous month, contrary to the 0.7% increase in April, while on the basis of the year, sales increased by only 2.2%, lower than the expectation of 2.7%. Although the data cooled down, inflation remained high, raising expectations that the BoJ will continue to tighten policy in the coming time.
Meanwhile, the USD is under pressure as the market increasingly believes that the US Federal Reserve (Fed) will cut interest rates by at least 50 basis points before the end of this year, with a 20% chance of a decrease in July. Fed Chairman Jerome Powell has recently maintained a "wait and see" stance, although President Donald Trump continues to call for a rate cut and is expected to announce Powell's successor in September or October, raising concerns about the Fed's independence.
The US economy also signaled a slowdown as GDP in the first quarter of 2025 fell 0.5% annually, further than the previously forecast 0.2% decline, due to consumer spending increasing by only 0.5%, the lowest level since 2020. The number of new unemployment benefit applications has decreased slightly, but the number of people receiving benefits has increased to the highest level since November 2021, reflecting the stagnant labor market.
Investors are now waiting for US personal consumption expenditure (PCE) price index data, the Fed's preferred inflation measure, due for release later this week. The result will be an important signal for the Fed's interest rate path, thereby directly affecting USD price fluctuations and the direction of the USD/JPY pair in the short term.
