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Yen firms as markets price faster Bank of Japan tightening

MUFG said USD/JPY climbing back toward 160.00 is keeping risks around possible Japanese FX intervention in focus.

Reported · Written up by our desk · Major Pairs

MUFG currency strategist Lee Hardman said the Japanese yen strengthened modestly as markets increasingly expect a faster pace of Bank of Japan policy tightening.

FXStreet cites a Bloomberg report that Prime Minister Takaichi’s government is supportive of a near term BoJ hike, with the next move likely in September or October, and that the government and BoJ concerns over yen weakness and its inflation impact are aligning on the need for earlier action.

The analysis also points to earlier Kyodo reporting that joint FX intervention was enabled by BoJ Governor Ueda’s hawkish stance, including remarks that the central bank would accelerate the pace of rate hikes if necessary.

As USD/JPY rises toward the 160.00 area, market participants will watch whether Japan steps back into the FX market to support the yen, while rate pricing already reflects a hike by October and includes around 19 bps of hikes priced for September.

Latest closeUSD/JPY 159.42 ▲0.2%

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