JPY Surges on BoJ Hike Bets, Traders Eye Key Inflation Data
The Japanese Yen (JPY) has strengthened against the US Dollar (USD), following increased bets on a Bank of Japan (BoJ) rate hike in September. BoJ policymakers have opened the door for a rate increase, signaling an acceleration in the pace of hikes. The move would bring interest rates to their highest level in about 31 years and follow a rate hike in June.
According to UOB Group analysts, the recent slide in USD/JPY has shifted their medium-term bias. They note that the pair broke below 155.00 and plunged to a low of 154.04, suggesting further weakness for the USD. The next support level to watch is now the year-to-date low of 152.08.
Traders are closely monitoring key US inflation data, which will be published later this week. Hotter-than-expected inflation outcomes could boost the Greenback against the JPY in the near term, although traders are currently pricing in a 60% chance of an interest rate hike at the Federal Reserve's policy meeting.