BoJ Hawkish Bets Boost Japanese Yen Against US Dollar

The Japanese Yen has staged a strong comeback against its major currency peers after underperforming in recent days. Market experts believe the Bank of Japan (BoJ) will raise interest rates at its September meeting, supporting the yen.

The US Dollar is down 0.25% against the Japanese currency, trading at around 159.20 during early European trading session. Despite Japan's weaker-than-expected Q2 GDP data, analysts remain confident that the BoJ will hike interest rates in September, with an estimated probability of 80%

MUFG analysts acknowledge that the latest GDP release is 'weaker' and may challenge the BoJ's hawkish stance. However, they point out that the odds of a 25bp hike at the next meeting remain elevated, implying a strong chance of further BoJ tightening.