USD/JPY Rises as BoJ Hike Expectations Tumble
The Japanese Yen underperformed its currency peers on Thursday, with the USD/JPY pair trading 0.55% higher to near 158.40. The release of the Summary of Opinions (SoP) from the September policy meeting by the Bank of Japan (BoJ) had traders trimming their expectations for a near-term interest rate hike.
Analysts at MUFG noted that the Yen was 'the biggest mover overnight,' weakening by 'around 0.5% against the US Dollar.' They attributed this move primarily to the SoP, which 'appears to have disappointed some market participants who were looking for a stronger signal that the BoJ were open to another hike as soon as next month.'
According to MUFG, the publication had prompted the Japanese rate market to scale back BoJ hike expectations. At the start of this week, the Japanese rate market had been pricing in around 10bps of hikes by the October policy meeting, but that has now dropped to around 5bps.