Yen Rallies to Seven-Month High as BOJ Hike Expectations Grow
The Japanese yen has reached a near seven-month high against the US dollar, strengthening to as much as 152.89 per dollar on Tuesday. This marks its strongest level since February and a gain of roughly 4% from around 160 yen per dollar early last week.
The yen's rally is driven by growing expectations of a Bank of Japan rate hike next week, with traders largely expecting the central bank to increase interest rates by 25 basis points to 1.25%. Japanese Finance Minister Satsuki Katayama said Tokyo and Washington remain aligned in their approach to currency markets.
The dollar index was subdued at 98.93 on Tuesday, due in part to the euro trading largely flat at $1.1615. Market focus now shifts to US inflation readings this week, with traders pricing a roughly 60% chance of a Federal Reserve rate hike following Friday's stronger-than-expected nonfarm payrolls report.