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Yen firms as BoJ rate-hike odds rise, keeping USD/JPY near 159
USD/JPY traded in the low 159.00s after US private-sector activity accelerated, while swaps priced about an 80% chance of a Bank of Japan move in September.
The Japanese yen strengthened as expectations for tighter policy from the Bank of Japan firmed, leaving the US dollar muted against the yen. USD/JPY was last around the low 159.00s on Friday, with market focus split between Japan inflation and the US growth backdrop, FXStreet reported.
In Japan, July inflation quickened, with headline consumer prices up 1.9% year over year and core measures firming, and August business surveys came in stronger than expected. That combination hardened expectations that the BoJ will raise rates at its September meeting, with swaps pricing roughly an 80% chance of a move.
The yen’s gains were partially countered by US data and broader policy signals. FXStreet noted a flash S&P Global Purchasing Managers Index showed private sector activity accelerating, with the composite index rising to 56 from 54.5 on a stronger services reading, which supports the market’s view of higher-for-longer Federal Reserve policy and helps keep a floor under the dollar.
FXStreet also pointed to US plans to at least double buybacks of longer-dated debt to ease stress in the bond market, and said Washington’s pivot toward economic sanctions on Iran rather than further military strikes improved risk appetite. The piece added that upcoming catalysts include Fed Chair Kevin Warsh’s Jackson Hole debut next Friday and the BoJ decision on September 18, with USD/JPY holding above near-term moving averages around 158.8 to 158.9.
Latest closeUSD/JPY 159.31 ▼0.1%