The US dollar fell on Friday as investors remained cautious about interest rate expectations ahead of the release of import price data, after recent figures suggested inflation could accelerate in the coming months.

The Japanese yen outperformed the euro and the pound sterling after unexpectedly strong growth data from Japan showed that export volumes remained steady despite the new US tariffs.

Attention is turning to a meeting later on Friday in Alaska between US President Donald Trump and his Russian counterpart Vladimir Putin, amid doubts about the possibility of reaching a ceasefire agreement in Ukraine.

US import price data will receive more attention than usual after Thursdays data showed a sharp and unexpected rise in producer prices last month, which had pushed the dollar higher.

If import prices continue to rise, it may indicate that US companies are bearing the full burden of tariffs, leaving them with two options: pass the costs on to consumerspotentially fueling inflationor reduce their profit margins.

Financial markets are pricing in a 95% chance of a 25-basis-point US interest rate cut in September. Before Thursdays data, markets had already priced in such a cut and a 5% probability of a larger 50-basis-point cut.

Markets are also awaiting next weeks Jackson Hole symposium for clearer signals on the Feds next move, as signs of weakness in the US labor market, coupled with inflationary pressures from trade tariffs, could pose a dilemma for the interest rate path.

The yen rose by 0.4% against the dollar to 147.20 yen, supported by data showing the Japanese economy grew faster than expected in the second quarter.

Remarks earlier this week by US Treasury Secretary Scott Bessentwho said the Bank of Japan might be behind in addressing inflation risksalso helped the yen.

Jane Foley, head of FX strategy at Rabobank, said: Although Bank of Japan Governor Kazuo Ueda may dismiss Bessents remarks, Japanese authorities will not want the yens exchange rate to become a bigger concern for the Trump administration than it already is.

The euro rose by 0.25% against the dollar to $1.1675, with most analysts expecting the single European currency to benefit from any ceasefire agreement in Ukraine.

Francesco Pesole, FX strategist at ING, said: The Trump-Putin meeting and any greater clarity on the future course of the conflict in Ukraine have longer-term implications for the euro than for the dollar, adding: Theres a chance today could be the first step toward de-escalation, and markets may move cautiously now.

The pound sterling rose by 0.20% against the dollar to $1.3553, while the Australian dollar gained 0.2% to $0.6508.

The Chinese yuan retreated from a two-week high as sentiment weakened due to weaker-than-expected economic data.

In cryptocurrency markets, both Bitcoin and Ethereum rose after falling by about 4% each on Thursday. Bitcoin had touched a record high earlier on Thursday amid shifting expectations for US interest rate cuts.