Yen's Surge Marks Strongest Week in Three Months

The yen experienced significant gains this week, reaching its highest level in nearly three months due to market shifts and anticipated U.S. inflation data. Influenced by global stock sell-offs and potential rate changes by the Federal Reserve and the Bank of Japan, the yen is set for continued appreciation.

The yen is poised for its strongest week in nearly three months, as traders adjust their long-held positions against the struggling currency ahead of crucial U.S. inflation data that might confirm expectations of a rate cut. The yen surged to a near three-month high against the dollar on Thursday, having started the month at a 38-year low.

By Friday, the yen was at 153.66, marking a 2.5% rise for the week—its biggest weekly gain since late April. The movement follows suspected interventions by Tokyo in July that caused traders to unwind profitable carry trades. The global stock sell-off has also driven investors toward safe assets, including the yen.

Investor focus is now on U.S. personal consumption expenditure data, the Federal Reserve's preferred inflation measure. The PCE data is expected to be minimal, but any significant changes could influence the Fed's upcoming rate decision. Conversely, the Bank of Japan might raise rates next week, with analysts suggesting that the recent yen surge could allow for a more measured approach by the central bank.

(With inputs from agencies.)