The yen is hovering near its weakest level against the dollar in 40 years, as traders reassess the likelihood of Federal Reserve rate hikes. The Japanese currency was flat against the dollar at 161.82 yen, edging back from a two-year low of 161.95 on Thursday.
Market Analysis
Analysts from Capital Economics wrote in a research report that the dollar may be due for a pause in the near term, but further gains are expected in the second half of 2026 due to emerging monetary policy divergence between the U.S. and Europe.
The U.S. inflation data released on Thursday showed cost-of-living pressures increased further in May, with the Personal Consumption Expenditures price index rising 4.1% year-on-year. This was in line with economists’ expectations, as the Middle East conflict boosted energy prices.
Federal Reserve officials sent mixed signals about the policy path ahead, with Chicago Federal Reserve President Austan Goolsbee saying there was a ‘glimmer of hope’ on services inflation, but underlying price pressures are still too high. Meanwhile, Federal Reserve Bank of New York President John Williams said that while inflation pressures are likely to moderate this year, they remain too high.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
