BOJ Hike Expectations Send Yen Plummeting Against US Dollar
The Japanese Yen has seen a sharp decline in value against the US Dollar, with the USD/JPY pair falling by around 6% from its July high. This move is being driven by a combination of factors, including a repricing of expectations for Bank of Japan (BOJ) policy and a softening of Federal Reserve hike odds.
The BOJ has been seen as likely to tighten monetary policy, with both Takata and Ueda signaling that the central bank could move faster. This has led to a surge in the probability of a 25 basis point hike in September, which has contributed to the decline in the yen's value.
However, it is not just BOJ policy expectations that are driving the move lower. The Federal Reserve's dovish comments from Waller have also reduced the likelihood of a hike, putting pressure on the US dollar and contributing to the yen's rally.
The Japanese Ministry of Finance (MOF) has been accused of intervening in the currency markets, although it is unclear whether they have done so recently. If they have intervened, it would be the second time this year, following a ¥15.4 trillion intervention in July that effectively capped the USD/JPY pair at its high.