BoJ Hike Fails to Lift Yen as USD/JPY Breaks 157

The USD/JPY pair has broken above 157 as the Bank of Japan (BoJ) increased its rates by 0.25%, but the move was seen as a disappointment to markets, which had expected a more aggressive tightening cycle.

The BoJ's decision to hike rates for the first time in three years, taking the key rate to 1.25%, failed to lift the yen, with the USD/JPY pair continuing to trade at its highest level in 31 years.

Market analysts attribute the weakness of the yen to the widening interest rate differential between the US and Japan, which is creating a massive arbitrage opportunity that supports the USD/JPY pair.