BoJ Hike Bets Fuel Yen Rally Against USD

Japan's currency, the Yen, has seen significant gains against the US Dollar, driven by growing expectations for faster policy normalization from the Bank of Japan (BoJ).

According to OCBC's Christopher Wong, the USD/JPY pair broke below 155 and accelerated towards the low-154s as markets nearly fully priced a 25bp hike at next week's BoJ meeting.

Wong warns that sustained trading below 155 could turn prior support into resistance and open further downside, even as stronger US inflation data could trigger a rebound.