Dollar-Yen Exchange Rate May Rise as BOJ Signals No Further Rate Hikes

The Japanese yen may weaken if Bank of Japan officials indicate they're not in a hurry to raise interest rates further, even at their September policy meeting, according to ING's Francesco Pesole.

Money markets suggest investors expect two 25 basis-point rate increases by early next year, with LSEG data showing this expectation. Pesole believes the dollar could stay below 160 yen if the U.S. Federal Reserve officials prefer keeping interest rates on hold rather than raising them in the coming months. The dollar currently trades at 159.30 yen.

The euro remains steady against the dollar, as crude oil prices remain contained, with Brent crude last down 0.5% at $87.38. MUFG's Derek Halpenny notes that while the price of crude oil defies expectations of sharper price rises, natural gas storage in Europe is a concern.