USD/JPY Plummets Below 158 Amid BOJ Rate Hike Uncertainty

The USD/JPY currency pair has dropped below 158, its lowest level in about four weeks. This decline comes as markets reassess the likelihood of a Bank of Japan (BOJ) rate hike at its September 17-18 meeting.

A recent statement from BOJ board member Hajime Takata referred to this year as a 'regime change' in policy, suggesting that rate hikes should be more responsive to data rather than following a regular pattern. This shift reduces the yen's appeal as a cheap funding currency.

OIS pricing now indicates an 84% probability of a September BOJ rate hike and 96.5 basis points of cumulative tightening over the next 12 months.