USD/JPY bounces off almost-yearly lows following the release of US inflation data. 

The data shows inflation falling at a broadly expected pace but reduces the probability of a 50 bps rate cut from the Fed. 

JPY is supported by comments from BoJ’s Nakagawa hinting that an interest rate hike is in the pipeline. 

USD/JPY recovers to trade just below 141.00 after dipping to a new nine-month low on Wednesday. The rebound comes following the release of US inflation data. 

The US data lleads to an appreciation in the US Dollar (USD) amid prospects of a more measured approach to easing from the Federal Reserve (Fed), whilst the Japanese Yen (JPY) trades overall firm after comments from a Bank of Japan (BoJ) official suggested an interest rate hike was closer at hand than previously thought.  

US consumer prices mostly rose in line with expectations in August although the annual change in the headline Consumer Price Index (CPI) did undershoot economists’ expectations by a point, revealing a rise of 2.5% instead of the 2.6% forecast, according to data from the US Bureau of Labor Statistics on Wednesday. 

Core CPI (ex food and energy) also rose as expected but monthly core CPI rose by a higher-than-expected 0.3% suggesting some stubbornness in core prices, which analysts put down to sticky dwelling prices.