The U.S. dollar regained some of its recent losses on Monday, while the Japanese yen scaled back its safe-haven gains. Investors, still uncertain about the extent of an expected Federal Reserve rate cut later this month, shifted focus to this week’s U.S. inflation data for further guidance.

In China, data revealed that consumer prices accelerated in August at the fastest rate in six months, but worsening deflation in producer prices renewed calls for additional stimulus to support the struggling economy. The onshore yuan weakened by 0.3% to 7.1117 per dollar, while the offshore yuan declined by 0.27% to 7.1142.

“The report may continue to stoke deflation fears,” said Saktiandi Supaat, head of FX research and strategy at Maybank. “While there’s been talk of reserve requirement ratio (RRR) cuts, earlier easing measures had limited effect, so further cuts or interest rate reductions may only weaken the yuan.”

Global currencies struggled for direction after Friday’s U.S. jobs report offered little clarity on whether the Fed would opt for a standard 25-basis-point rate cut or a larger 50-basis-point cut at its next policy meeting. Although job growth in August was lower than expected, the unemployment rate dropped, and wage growth remained strong, suggesting a labor market that is cooling, but not enough to prompt fears over economic growth.

The yen gave back some of last week’s 2.73% gains, as market uncertainty eased following the nonfarm payrolls report. It was down 0.44% at 142.92 per dollar. Investors largely ignored earlier data showing Japan’s economy expanded more slowly than initially reported for the April-June period, following downward revisions in corporate and consumer spending.

Meanwhile, the euro dipped 0.1% to $1.1075, and the British pound edged down 0.08% to $1.3119. The U.S. dollar index, which measures the dollar against a basket of other currencies, rose 0.13% to 101.33.

“The Fed is at a crossroads,” said Boris Kovacevic, global macro strategist at Convera. “With mixed signals from the job market, they are unlikely to commit to either a 25 or 50 basis point cut just yet.”

Fed officials have indicated their readiness to begin a series of interest rate cuts at their upcoming meeting on September 17-18, acknowledging signs of cooling in the labor market. Futures markets currently show a 29% chance of a 50-basis-point rate cut, with Wednesday’s U.S. inflation report set to be a key factor in determining the outcome.

“While larger cuts later this year are possible if the economic data worsens, we anticipate a 25-basis-point rate cut in September, with additional cuts at the same pace likely in November and December,” said David Doyle, head of economics at Macquarie.

In other currencies, the Australian dollar rose 0.04% to $0.6673, following a more than 1% decline last week, when it hit a three-week low. The New Zealand dollar fell 0.13% to $0.6167, remaining near its two-week low reached on Friday.

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