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Yen slides as traders scale back Bank of Japan October hike bets
USD/JPY is just above 158.00 and set for a third straight weekly gain as traders reduce expectations for an October follow-up.
The yen weakened as traders trimmed expectations for a Bank of Japan October interest-rate follow-up, according to FXStreet. The BoJ released its September meeting summary at 23:50 GMT on Wednesday, and traders cut bets on the next step after that timing.
Japanese rate markets now price about half of the October move they had priced on Monday, ahead of an upcoming Tokyo inflation release that is forecast above the BoJ’s 2% target, FXStreet reported. USD/JPY was trading just above 158.00 and was moving toward a third weekly gain.
FXStreet noted that the BoJ raised its rate to 1.25% on September 18 by a 7-2 vote and said it would continue raising if its outlook holds. Analysts cited the BoJ’s quarterly cadence language as implying the next hike comes in December rather than October.
With an October follow-up pushed out, FXStreet said the next potential widening in the gap between US and Japanese rates would come from the Fed on October 28, where futures put odds of a hike near one in three. The yen’s latest rise in USD/JPY was also linked to a report of a third US aircraft carrier group heading to the Middle East, which supported dollar demand as a haven.
Latest closeUSD/JPY 157.40 ▲0.0%