USD/JPY drifts lower, nears 147.00 ahead of US GDP, Tokyo CPI data

• The US Dollar extends losses on Wednesday amid higher hopes of Fed easing.
• Fed Williams opened the door to a rate cut in September and sent the US Dollar lower across the board.
• Tokyo CPI numbers, due later today, and Friday's US PCE Prices Index will set the USD/JPY's near-term direction.

The US Dollar is extending its reversal from Wednesday’s highs above 148.00 to levels near the 147.00 round figure on Thursday, with the Greenback on its back foot ahead of the release of US Gross Domestic Product and Weekly Jobless Claims figures, due later today.

The US Dollar featured a knee-jerk reaction on Wednesday, following comments by New York Fed president, John Williams, at a CNBC interview, where the central banker fueled hopes of the Fed easing further.

Williams stated that interest rates are currently at restrictive levels and will likely decrease at some point. More interesting was his comment affirming that all Fed monetary policy meetings are “live” on rates, which was taken by the market as a hint to a September rate cut.

Tokyo CPI and US PCE Price Index in focus

On the macroeconomic front, the US Q2 GDP is expected to be revised up to 3.1% annualised growth, from the previous 3.0% estimation, while Jobless Claims are seen dropping to 230,000 from 235,000 last week.

In Japan, the focus will be on the August Tokyo CPI index, which will be analysed with special attention to assess the odds for the BoJ tightening in September, an option that is gaining ground after recent comments from Governor Ueda, warning about the inflationary trend in wages.

The highlight of the week, however, is Friday’s US PCE Prices Index release. The Fed’s favourite inflation indicators are expected to show that headline inflation remained steady, growing at a 2.6% yearly rate in July, while the core inflation accelerated to 2.9% last month, from 2.8% in June.

near-term