BoJ Rate Hike Expectations Rise as Yen Strengthens

The Japanese yen strengthened last week as markets grew more confident that the Bank of Japan will raise interest rates soon. This speculation also suggests that the BoJ may increase rates faster than previously expected.

Finance Minister Satsuki Katayama emphasized that authorities are closely monitoring the yen's movement, fueling expectations for a potential rate hike. The strengthening yen weighed on the USD/JPY pair, which fell significantly last week.

The rise in oil prices at the beginning of the week also contributed to concerns about inflation, leading Fed Governor Christopher Waller to suggest that he could support keeping U.S. interest rates unchanged if inflation continues to fall.