BOJ Rate Hike Expectations Send USD/JPY Below 160
The USD/JPY exchange rate has slipped back below 160 due to increasing expectations of two Bank of Japan (BOJ) rate hikes this year.
US Treasury Secretary Scott Bessent's recent comments and media reports suggesting a faster pace of rate tightening have pushed the front-end Japanese Government Bond (JGB) yields to fresh multi-decade highs.
The BOJ may raise rates faster than twice-a-year, with a September hike potentially opening the door for another by year-end. Markets now price around a 70% chance of a 25bp hike in September and roughly 75% for a second move by December.