NEW YORK- The dollar fell on Friday after a reading of US inflation signaled price pressures continue to ebb, while the yen strengthened against the greenback after Shigeru Ishiba, seen as an interest rate hawk, was set to become Japan’s next prime minister.

The US personal consumption expenditures (PCE) price index rose 0.1 percent in August, matching expectations of economists polled by Reuters, after an unrevised 0.2 percent gain in July. In the 12 months through August, the PCE price index increased 2.2 percent after rising 2.5 percent in July.

In addition, consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.2 percent last month after an unrevised 0.5 percent gain in July. The data was slightly below the 0.3 percent estimate but indicated the economy still maintained some momentum in the third quarter.

The Federal Reserve has recently signaled a shift in focus away from inflation and towards keeping the labor market healthy, but delivered a larger-than-usual interest rate cut of 50 basis points (bps) last week.

“(Fed Chair) Powell can breathe a little sigh of relief,” said Brian Jacobsen, chief economist at Annex Wealth Management in Menomonee Falls, Wisconsin.

“After pushing for a 50 bps cut instead of a more conventional 25 bps cut the personal income and spending data so far vindicates that decision.”

The dollar index which measures the greenback against a basket of currencies, including the yen and the euro, was down 0.17 percent at 100.43 after falling to 100.15, its lowest since July 20, 2023, with the euro off 0.14 percent at $1.116.