Yen Slips Amid Fed Rate Cut Speculations and Economic Data Watch

The yen declined against the dollar in quieter currency trading as investors speculate on a potential Federal Reserve interest rate cut and forthcoming U.S. economic data. Markets experienced volatility last week due to concerns over the U.S. economy and the Bank of Japan's policies. Investors await key producer and consumer price data that could impact future Fed decisions.

The yen slipped against the dollar on Monday as investors speculated on the likelihood of a significant Federal Reserve rate cut next month amid a quieter currency market. This comes after a tumultuous week marked by a massive sell-off across currencies and stock markets, fueled by concerns over the U.S. economy and the Bank of Japan's hawkish stance.

Last week's volatility calmed somewhat by Thursday, helped by stronger-than-expected U.S. jobs data which led markets to reduce expectations for Federal Reserve rate cuts this year. 'All eyes are on the consumer price index data coming this week to see if the inflation narrative continues or shifts towards possible recession signs,' said Joseph Trevisani, senior analyst at FXStreet.com in New York.

According to the CME Group's FedWatch tool, investors are still pricing in 100 basis points of Fed cuts by year-end. Tuesday and Wednesday's U.S. producer and consumer price numbers could potentially shift market sentiment further. 'Currently, the focus is back on the labor market, but unexpected inflation data could redirect Fed attention,' Trevisani added.

(With inputs from agencies.)