Dollar Pushes Higher Against Yen as Policy Risks Collide

The Dollar continues to push higher against the Yen in early Asian trading on Tuesday, amid concerns of potential foreign exchange intervention. The USD/JPY pair is trading near 157.40, up 2.82% from recent lows to 157.26.

Japanese officials have pledged closer coordination with the US to address Japanese Yen weakness, with Tokyo stressing that markets should heed their 'very clear' message. Finance Minister Satsuki Katayama and US Treasury Secretary Scott Bessent emphasized their intention to deepen cooperation on this issue.

Despite the Bank of Japan's 25 bp rate hike to 1.25%, the Yen remains under significant downside pressure against the Dollar. Market participants are assigning a 70.3% probability to a 25 bps rate increase at the Fed's October meeting, with pricing indicating almost full expectation for four quarter-point hikes over the coming 12 months.