Yen Rises as Soft US Inflation Data Reduces Hike Odds
The Japanese Yen saw a significant spike following the softer-than-expected US inflation data, which reduced the likelihood of an October rate hike by the Federal Reserve to nearly 35%. As a result, the USD/JPY pair fell below 156.50 but quickly recovered and closed just under 157.50, its fourth consecutive close at this level.
The Bank of Japan's (BoJ) decision on the same day it is expected to raise interest rates is seen as a key factor in the currency market. The BoJ has raised its rate to 1.25% and markets now give it a roughly one-in-three chance of hiking again, similar to the Federal Reserve.
Japan's big manufacturers are forecast to feel more optimistic about their business conditions, with the BoJ's Tankan survey expected to show improvement. The Tokyo Consumer Price Index (CPI) is also due on Thursday, which could provide further insights into the Japanese economy.