Yen Rallies Unfazed by Oil Prices, BoE Inflation Warning

The Japanese Yen has continued its rally, despite higher crude oil prices that would traditionally act as a headwind for the currency. Brent oil is currently trading at $97.00, near its highest levels in two months, but this hasn't dented the Yen's recovery.

Strategists at Rabobank are warning that if the Bank of Japan (BoJ) signals a faster pace of rate rises in the coming months, it could challenge the durability of using the Yen as a low-cost funding currency. This would prompt investors to reassess their positioning built up over years of ultra-loose Japanese policy.

In the UK, Bank of England Governor Andrew Bailey acknowledged that inflation risks are on the upside, but he also vowed to dispel the idea that rate hikes are inevitable, saying decisions will depend on economic and geopolitical developments. The Pound dropped against most peers following his comments.