USD/JPY Rallies Five Days Straight Amid Hawkish Fed Outlook
The USD/JPY pair is on a five-day winning streak as traders bet on a Federal Reserve rate hike. The US dollar's strength and pressure on the Japanese yen are supporting the pair, which has clawed back most of its decline from near 160 earlier this month.
Rising US bond yields, driven by strong economic data and hawkish Fed outlook, are also contributing to the pair's advance. The S&P Global Composite Purchasing Managers' Index climbed to a five-year high in September, while Initial Jobless Claims fell below expectations.
The Japanese yen is struggling as its bond yields rise, but this has not helped the currency due to the wide yield gap with the US. The Bank of Japan's decision to raise its policy rate by 25 bps last week was seen as slightly dovish, and traders are monitoring the geopolitical situation for any signs that the US and Iran may reach an agreement on the Strait of Hormuz.