U.S. Dollar Strengthens Ahead of Key Inflation Report

On August 12, 2025, the U.S. dollar firmed against the Japanese yen at around ¥148.40, while remaining stable against both the euro—at approximately $1.1622—and the British pound—near $1.3426. Market participants are bracing for the upcoming U.S. Consumer Price Index (CPI) release, with its outcome poised to shape expectations around a potential Federal Reserve rate cut in September. A moderate reading could bolster the case for a cut, whereas elevated inflation—possibly fueled by tariffs—might delay any easing.

Signs of softness in the labor market are increasingly weighing on Fed officials’ outlook, prompting traders to place roughly an 89 percent probability on a 25-basis-point rate cut by mid-September. Experts at TD Securities caution that an upside surprise in inflation could unsettle current projections, though a softer outcome is unlikely to alter market expectations much.

Trade developments drew little reaction from markets: President Trump’s postponement of higher Chinese tariffs drew minimal attention. Meanwhile, chipmakers Nvidia and AMD reportedly agreed to funnel 15 percent of their Chinese revenue to the U.S. government amid ongoing trade negotiations. Elsewhere, the Chinese yuan remained firm, Australia’s dollar was little changed following the Reserve Bank’s recent rate move, and Bitcoin hovered near the $119,000 mark.