The US dollar rose above the 155.00 line against the Japanese yen during the European session on Friday, after bouncing from two-week lows of 154.30 on Thursday. However, the pair is still on course for a weekly low of 0.6%, weighed down by market hopes that the US Federal Reserve will cut interest rates next week.
On Friday, all eyes will be on the delayed US Personal Consumption Expenditures (PCE) Price Index report for September. Personal consumption expenditures data is expected to show that inflationary pressures remain high, although it is unlikely to change market expectations for further Fed easing.
The unexpected decline in net jobs, shown by the US ADP Employment Change report on Wednesday, confirmed the weak momentum of the US labor market and strengthened the argument in favor of lower borrowing costs. US group CME Group’s Fedwatch tool shows an 87% interest rate cut of 25 basis points next week, and between two and three more cuts next year.
Conversely, the Bank of Japan (BOJ) was paving the way for a 25 basis point rate hike after its meeting on December 19, although Governor Kazuo Ueda on Thursday cast doubt on what comes next.
Apart from that, Japanese officials reiterated their pledge to intervene in case of excessive yen weakness. Japan’s Cabinet Secretary stressed on Thursday that authorities “will take appropriate action on excessive and disorderly movements in the currency market.”“,” Echoing Finance Minister Katayama’s comments earlier this week, offering some support to the Japanese yen.
Economic indicator
Personal consumption expenditures – price index (annual)
The Personal Consumption Expenditures (PCE) report, which is issued by the US Bureau of Economic Analysis on a monthly basis, measures changes in the prices of goods and services purchased by consumers in the United States. The annual reading compares prices in the reference month to the previous year. Price changes may cause consumers to switch from purchasing one good to another and the personal consumption expenditures deflator can take such substitutions into account. This makes it the Fed’s preferred measure of inflation. In general, a high reading is considered bullish for the US Dollar (USD), while a low reading is considered bearish.
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Next release:
Friday 05 December 2025 at 13:30
repetition:
monthly
consensus:
2.8%
former:
2.7%
source:
US Bureau of Economic Analysis
Economic indicator
Core Personal Consumption Expenditures – Price Index (annual)
Core personal consumption expenditures (PCE), issued by US Bureau of Economic Analysis On a monthly basis, it measures changes in the prices of goods and services purchased by consumers in the United States. The Personal Consumption Expenditures Price Index is also the Fed’s preferred measure of inflation. The annual reading compares commodity prices in the reference month with the same month of the previous year. The core reading excludes the more volatile so-called food and energy components to give a more accurate measure of price pressures.
Read more.
Next release:
Friday 05 December 2025 at 13:30
repetition:
monthly
consensus:
2.9%
former:
2.9%
source:
US Bureau of Economic Analysis
Following the publication of the GDP report, the US Bureau of Economic Analysis releases personal consumption expenditures (PCE) price index data along with monthly changes in personal spending and personal income. Policymakers at the Federal Open Market Committee use the core annual personal consumption expenditures price index, which excludes volatile food and energy prices, as their main measure of inflation. A stronger than expected reading may help the US dollar outperform its rivals, as this may indicate a possible hawkish shift in the Fed’s future guidance and vice versa.
