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Yen firms versus dollar as BoJ hike bets lift JPY strength
The BoJ is seen raising its policy rate to 1.25% from 1.0% at its September meeting, which would mark the highest level in about 31 years.
The Japanese yen strengthened against the US dollar, with USD/JPY losing momentum to around 153.55 in early Asian trade on Wednesday. FXStreet attributed the move to growing expectations that the Bank of Japan could deliver a rate hike in September.
Market focus is shifting to upcoming US inflation data, including Producer Price Index and Consumer Price Index releases later this week, which could influence expectations for the Federal Reserve. FXStreet noted that hotter-than-expected inflation could support the greenback against the yen in the near term.
FXStreet said the BoJ is expected to lift its policy rate to 1.25% from 1.0% at its September meeting, taking rates to their highest level in about 31 years and building on a June hike. The report also cited BoJ board member Hajime Takata, who said a 25-basis-point increase is not necessarily set in stone and that back-to-back hikes could be possible.
According to FXStreet, traders are pricing roughly a 60% chance of a US rate hike, based on the CME FedWatch Tool. Analysts at UOB Group said USD weakness has shifted their medium-term view after USD/JPY broke below 155.0, with 154.04 cited as a low and 152.08 listed as the year-to-date low to watch.
Latest closeUSD/JPY 153.54 ▼0.2%