Japanese Yen Surges on US Bond Buybacks, Eyes BoJ Rate Hike
The Japanese Yen has strengthened against the US Dollar in recent trading hours due to the US Treasury's bond buyback programs, which have weighed on the Greenback. The USD/JPY pair lost ground to near 158.90 during Asian trading hours on Wednesday. The US Treasury's decision to double its bond buyback operations to at least $4 billion per operation has raised concerns about national debt surpassing $40 trillion.
According to a Reuters poll, 57% of economists expect the Bank of Japan (BoJ) to raise interest rates in September, a sharp turnaround from a previous poll. BoJ board member Naoki Tamura will attend the US Federal Reserve's annual Jackson Hole gathering this week on behalf of Governor Kazuo Ueda.
Scotiabank strategists highlight that while near-term pricing has adjusted to expectations for BoJ tightening around the September 18 meeting, market participants are increasingly sensitive to how policymakers frame the subsequent policy path. The technical analysis suggests a bearish near-term bias for USD/JPY, with price trading below the 100-day Simple Moving Average (SMA) and the Relative Strength Index (14) sitting below the neutral 50 line.