Euro Falls Against Japanese Yen Amid Rising Hike Expectations
The Euro has dipped against the Japanese Yen in the European trading session on Monday, as investors weigh the likelihood of a Bank of Japan interest rate hike in September.
Market expectations have shifted in favor of near-term tightening by the BoJ, with the implied probability of an interest rate hike in September rising to around 84%, according to Commerzbank.
The Euro is trading with caution ahead of German Harmonized Index of Consumer Prices (HICP) data for August, which is expected to show inflationary pressures accelerating at a rate of 3% Year-on-Year (YoY), up from 2.8% in July.
Analysts at Danske Bank note that the market is nearly fully priced for a 25bp rate hike at the September meeting, reflecting elevated inflation expectations despite recent improvement in Euro area sentiment.