USD/JPY Surges as BoJ Rate Hike Fails to Impress

The US dollar against the Japanese yen (USD/JPY) has risen to around 157.55 in early Asian trading, following the Bank of Japan's decision to raise interest rates by 25 basis points to 1.25%, its highest level in 31 years.

However, this move fell short of overtly hawkish guidance, leaving markets uncertain about future rate hikes. Swaps markets currently price less than a 20% chance of another increase at the end-October meeting but a 90% probability of an increase in December.

The Bank of Japan's lack of clear guidance has sparked speculation about potential currency intervention near the 160.00 level, with some officials reportedly conducting rate checks - a step often seen as a precursor to such action.