The dollar index (DXY00) fell by 0.07% on Friday, impacted by a 3% decline in WTI crude oil prices, which reached a four-month low. This drop is seen as easing inflation expectations that could influence the Federal Reserve’s monetary policy decisions. The University of Michigan’s June consumer sentiment index was also revised upward to 49.5, below the expected 50.0.
In economic data, U.S. May wholesale inventories increased by 0.3%, slightly below expectations of 0.4%, while retail inventories rose by 0.6%, exceeding expectations of 0.5%. The swaps market is currently assigning a 30% probability of a 25 basis point rate hike at the upcoming Federal Open Market Committee meeting on July 28-29.
In Japan, the June Tokyo Consumer Price Index (CPI) rose by 1.7% year-over-year, surpassing the expected 1.6%. The Bank of Japan faces increasing pressure regarding its monetary policy, especially as the yen approaches 160 per dollar. The risk of currency market intervention is increasing as U.S. and Japanese officials discuss foreign exchange policy alignment.
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