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Yen stays near two-week lows versus dollar as BoJ hike odds rise
USD/JPY was around 159.5, with MUFG saying September pricing implies roughly an 80% probability of a 25bp BoJ hike even as Japan GDP came in weaker than expected.
The Japanese yen traded close to a two-week low against the US dollar in Asian trading, with USD/JPY around 159.50, as currency markets continued to price in a likely Bank of Japan rate hike in September, according to FXStreet.
MUFG said market pricing for a 25 basis point increase at the next meeting remained elevated, implying about an 80% probability of a hike, and argued that firm rate-hike expectations could help limit renewed yen selling in the near term even with softer economic data.
FXStreet also pointed to the BoJ’s Summary of Opinions, where several board members favored additional near-term tightening after the central bank left rates unchanged at 1%, including one member calling for a faster pace based on upside inflation risks.
On the growth side, Japan’s preliminary Q2 GDP came in weaker than expected, with real GDP rising 0.3% quarter over quarter versus 0.5% in Q1, and the expansion supported by net exports, government consumption, and private inventories, offsetting softer domestic demand.
On the US front, the dollar was expected to trade sideways as investors awaited the release of FOMC minutes from the July meeting, after which the Fed held rates in the 3.50% to 3.75% range and offered no forward guidance, FXStreet said.
Latest closeUSD/JPY 159.31 ▼0.1%