Japanese Yen Surges as BoJ Hike Bets Intensify

The Japanese Yen has strengthened to its highest level since February 18 after Japan's government reported that real wages rose by 2.4% in July from a year earlier, marking the biggest increase since May 2021.

This upbeat data has reinforced hawkish bets on the Bank of Japan (BoJ) raising interest rates next week and further tightening thereafter.

The USD/JPY pair has declined for the second straight day, falling to its lowest level since February 18 in the mid-153.00s during the Asian session on Tuesday.

Some analysts believe there is a risk of a jumbo hike to anchor rising inflation expectations and cap long-end yields, which would ultimately support the JPY.