USD/JPY wobbles around 147.50 ahead of US producer inflation data

• USD/JPY consolidates around 147.50 as investors await US PPI data for August.
• The Fed is certain to cut interest rates in the policy meeting next week.
• The Japanese economy faces a political crisis amid PM Ishiba's resignation as LDP leader.

The USD/JPY pair trades in a tight range around 147.50 during the European trading session on Wednesday. The pair consolidates as investors await the United States (US) Producer Price Index (PPI) data for August, which will be published at 12:30 GMT.

Investors will closely monitor the US PPI data to get cues about the size of interest rate cut by the Federal Reserve (Fed) in its policy meeting next week, with traders remaining confident that the central bank will lower key borrowing rates.

According to the CME FedWatch tool, traders see an 8.4% chance that the Fed will cut interest rates by 50 basis points (bps) to 3.75%-4.00%, while the rest point a standard 25-bps interest rate reduction.

Economists expect the US headline PPI to have grown steadily at an annualized pace of 3.3%. Meanwhile, the core PPI - which excludes volatile food and energy items - is estimated to have risen moderately by 3.5%, against 3.7% in July.

Ahead of the US PPI data, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades calmly near 97.80.

Meanwhile, the Japanese economy is facing a deep political crisis after the resignation of Prime Minister Shigeru Ishiba from his post as president of the Liberal Democratic Party (LDP). Ishiba stepped down after his opponents at LDP called on him to take responsibility for the party's losses and for his incompetence in the trade deal with Washington.

Going forward, investors will focus on the Bank of Japan's (BoJ) monetary policy announcement next week.