Market Overview

The U.S. dollar index was around 99.06, little changed after rising 0.3% on Thursday to its highest level since September 7. The EUR/USD pair was flat at 1.1609, while the GBP/USD pair rose 0.06% to 1.3520.

US Data and Fed Expectations

U.S. producer prices increased 0.4% in August, matching expectations, with energy prices rebounding and raising concerns that higher oil prices could keep inflation elevated. Fed funds futures priced a 71.3% probability of a 25‑basis‑point rate hike at the September 15‑16 Federal Reserve meeting, up from 61.2% the previous session. DBS projected the Fed’s policy rate to remain at 3.75% at that meeting but warned the session could be contentious. The 10‑year Treasury yield was around 4.97%, close to the 5% level.

Japan Inflation and BOJ Outlook

Japan’s wholesale inflation data showed a 7.6% year‑on‑year increase in August, faster than economists expected, reinforcing expectations that the Bank of Japan will raise its policy rate by 25 basis points to 1.25% at its September 17‑18 meeting. DBS also expects a 25‑basis‑point hike but anticipates the BOJ may signal a flexible tightening pace rather than a rapid succession of increases, leaving the yen sensitive to both BOJ guidance and the Fed’s decision.

Asian Currency Movements

The USD/JPY pair traded around 154.18, down 0.16% on the day, making the dollar about 1.2% stronger against the yen this week and more than 3% weaker over the past month after the yen’s sharp rally earlier in September. Other Asian currencies showed mixed weekly moves: the USD/AUD pair was up roughly 0.6% for the week, indicating a weaker Australian dollar; the New Zealand dollar had recently strengthened; USD/CNH and USD/CNY were broadly flat on the week; USD/SGD was largely unchanged; USD/KRW was little changed despite a stronger won in Friday trading; and the USD/INR hovered around 95.67 after the rupee faced pressure from a surge in oil prices.

Upcoming Economic Releases

Next week’s Asian data calendar includes India’s August consumer‑price index, exports and imports on Monday; China’s August retail sales, industrial production and fixed‑asset investment on Tuesday; and Japan’s August trade data on Wednesday.