BOJ Rate Hike Expectations Spark USD/JPY Pressure

The USD/JPY pair has been under pressure this week due to rising expectations of two BOJ rate hikes this year.

This comes as Japanese front-end yields have pushed to fresh multi-decade highs, and US Treasury Secretary Scott Bessent's comments implying the BOJ may speed up its rate hike pace.

Bessent said he has information that the market doesn't have, suggesting Japanese authorities may be preparing further measures to counter yen weakness.

The BOJ's OIS curve has undergone a significant hawkish shift over the past couple of months, with markets now pricing around a 70% chance of a 25bp hike in September and a second move by December at roughly 75%.