Dollar softer ahead of Yellen; Yen unmoved by weak Japan inflation data

The US dollar fell against most major currencies on Friday as traders remained wary ahead of Fed Chair Janet Yellen’s much anticipated speech later in the day at the Jackson Hole economic symposium in Wyoming, United States.

The dollar index was down 0.2% on the day as the US currency lost ground against most majors but it was flat against the yen. The Japanese currency came under some pressure after data out today showed inflation in Japan fell deeper into negative territory in July.

Core CPI, which excludes fresh food prices, fell from -0.4% to -0.5% year-on-year in July, missing forecasts that it would stay unchanged. This was the fifth consecutive month that prices have fallen in Japan and increases the likelihood that the Bank of Japan will expand its stimulus program when it meets in September.

The dollar was stuck around 100.45 yen in late Asian trading today after failing in its attempts in the past two days to rise past 100.60 yen. Investors will be looking to Janet Yellen’s address on the US economy for further direction as markets have so far been cautious to increasingly hawkish views from Fed policymakers. Top Fed officials, including Esther George, Robert Kaplan and John Williams, arriving at the Jackson Hole summit, have continued to make the case for a rate hike in their remarks, possibly as early as September.

In other currencies, the euro briefly rose back above 1.13 dollars in Asian trading today before easing to around 1.1290 dollars in late session. The single currency yesterday shrugged off surprisingly weak German Ifo survey data that indicated a delayed reaction to the Brexit vote with German businesses becoming less confident in August.

The pound also advanced higher against the dollar, reclaiming the 1.32 level, and is on track for its best weekly performance in six weeks.

In commodities, crude oil eased back on Friday after tensions between Iran and the US drove prices higher on Thursday. Reports that Iranian vessels had intercepted a US ship in the Persian Gulf pushed US crude back above $47 a barrel and Brent oil above $49. However, the gains were capped after a Saudi energy minister today dampened expectations of “significant intervention” by oil producers at September’s informal meeting.

Gold prices moved higher though in today’s Asian session as the dollar came under pressure before Yellen’s keynote speech. The yellow metal was last trading at $1324.50 an ounce.

Looking ahead to the rest of the day, second estimates for UK and US GDP growth in the second quarter will be the main data of the day before attention turns to Janet Yellen’s Jackson Hole address at 14:00 GMT.