BoJ Hike Odds Support Yen as US Dollar Falls

The Japanese Yen has made a strong recovery against its major currency peers after underperforming in recent days. The US Dollar is down 0.25% against the Yen at around 159.20 during early European trading.

Firm expectations of an interest rate hike by the Bank of Japan (BoJ) remain intact despite weaker-than-expected Q2 GDP data, which showed a 0.3% quarterly pace and 1.1% annualized growth.

Analysts at MUFG acknowledge that the GDP release is 'certainly a weaker GDP report' but point out that markets still see a strong chance of further BoJ tightening, with around an 80% probability of a hike in September.